An Examination of an FTSE-100 Index Company’s Financial Performance: The Moderating Effect of the BREXIT Agreement (An Analysis Spanning the Previous Five Years)
DOI:
https://doi.org/10.54536/ajebi.v4i1.4035Keywords:
Brexit Agreement, FTSE-100 Index, GBP to EUR Exchange Rate, Market PerformanceAbstract
This study examined the ways in which the Brexit deal and the GBP-EUR exchange rate affected the performance of the FTSE-100 between 1 January 2018 and 31 December 2022. An MGARCH (1,1) model was used in the study to evaluate statistical processes using pre- and post-tests. According to the ARCH effect test, the regression analysis was not as good as this model. The findings showed that the moderating variables of Brexit and the GBP-EUR exchange rate, which were all statistically significant at the 1% level, significantly impacted FTSE-100 returns. In addition, the investigation assessed how the COVID-19 pandemic affected the index’s performance and found that despite the continued influence of FOREX and Brexit, COVID-19 significantly increased volatility. Two scenarios related to Brexit have been studied in this research: soft Brexit, which has a good impact on the pound and UK financial firms, and hard Brexit, which may result in economic difficulties and currency depreciation. The study has made important information available to investors predicting UK stock values. It has acknowledged certain shortcomings, though, like its emphasis on the FTSE-100 and its exclusion of other macro and microeconomic factors. Further research into the long-term effects of Brexit and other economic issues affecting market performance is recommended.
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