The impact of Brexit on the British currency and stock market performance: a sentiment analysis approach

Abstract

Purpose This paper aims to analyze the impact of Brexit social media sentiments on the stock market and currency exchange performances in UK after taking this decision. Design/methodology/approach Analyzing the dynamics of relationship between Brexit sentiments and stock market and currency exchange using time-series analysis. The variables of interest are GBP Exchange Rates with respect to USD and EUR in Currencies and FTSE-100 Index value, representing the stock price behavior and a measure of overall social media sentiment. Findings The results show that there's a minor gap between opponents and proponents of Brexit, which matches the referendum results in 2016, yet this minor gap has a significant negative impact on the stock market and exchange rate performances in the UK. Originality/value The study's significance lies in its use of sentiment analysis to understand public opinion and the use of social media analytics to study market performance. The research contributes to the literature by examining the long-term relationship between social media (Twitter/X) sentiments and market performance.