European Union

With the UK's referendum on EU membership due in four months, it appears the market is gravely concerned about the possibility of Brexit. Despite the unleashing of Project Fear (both military and corporate fearmongery), cable (GBPUSD) has crashed 2.3% (the most in 7 years) to its lowest in 7 years, and both FX volatility and credit risk Brexit indicators are soaring to record highs.

Just as we warned, Friday's dubious gains have evaporated and cable is crashing to 7 years lows...

As Deutsche Bank's Jim Reid notes,

Over a dozen senior UK military leaders are to sign a letter warning voters not to support leaving the EU in the upcoming referendum. They say that doing so would compromise the UK’s national security.

The overnight news was decidedly downcast, with first London mayor Boris Johnson voicing his support for Brexit leading to a collapse in the pound, validating our Saturday warning and then some, resulting in the biggest drop in cable in over a year over fears that the EU will lose one of its most critical members...

London Mayor and Tory MP Boris Johnson has announced his plans to campaign for Britain to leave the European Union (EU), pitting himself against Prime Minister David Cameron who has urged Britons to vote “yes” in an upcoming in-out referendum this June. The BBC broke the news of Boris’ voting preference on Sunday, stating: “Mayor of London Boris Johnson is to campaign to leave the EU in the UK’s referendum, BBC understands”. Breitbart.com reports: UK Independence Party leader Nigel Farage told Breitbart London exclusively this afternoon: “This is really good news.

Just as the government did in the lead up to The Scottish Referendum in 2014, it appears David Cameron is already unleashing resorting to the so-called Project Fear. As The Telegraph reports, following Boris Johnson's lack of acquiescence to Cameron's call for no Brexit, more than a dozen of the country's most senior military leaders will argue that Britain should vote to stay in the European Union because of its importance to national security.