| dc.description.abstract | The outcome of the Brexit referendum was unanticipated by the financial market and due
to the concept of a country exiting the EU being completely new no one knew what to
expect. This led to uncertainty which was not helped by the constantly changing deadline
of Brexit. As a result, the financial market suffered. The aim of this research is to gain a
clear understanding of the effect Brexit has had on the value of the British pound
compared to the Euro during the referendum and following negotiation period between
the EU and the UK.
The research was conducted through a quantitative approach, more precisely an event
study. Nine key events of Brexit were identified and the exchange rate data of the
GBP/EUR for the relevant timeframes was collected and used to calculate the normal,
abnormal and cumulative abnormal returns. In order to get more conclusive findings two
different approaches were used for the normal returns, constant and non-constant normal
return.
The findings suggest that the fluctuation of the GBP exchange rate is connected to Brexit
and that Brexit does have short term effects on the spot exchange rate of the GBP
exchange rate. Events perceived as positive led to an appreciation and events perceived
as negative led to a depreciation. These results are not a surprise as they correspond
with the results of previously research. For future research it is recommended more
events are used within the event study as the Brexit period is a big timeframe. In addition,
the research could also be helped along by using more than just the GBP/EUR exchange
rate. Lastly to gain a deeper understanding of the topic a mixed method approach could
be used. Interviews would be a good way to find out more about the personal reason’s
investors wanted to invest or not invest. | en |
