Here's the simplest way to understand how a Brexit would affect the US

Before you go, we thought you'd like these...
Before you go close icon

The Consequences of a Brexit

What a Brexit would do to the US economy really boils down to what happens to the dollar.

Britons will vote on Thursday to decide whether the UK should remain a part of the European Union.

The UK is one of the region's most important economies. And because of possible negative-growth ripples throughout the region, the prospect of a Brexit has worried traders.

SEE ALSO: Trump supporters call for boycott of prominent retailer

The key channel to the US would be the dollar, according to Andrew Milligan, head of global strategy at UK-based Standard Life Investments, which manages $370 billion in assets.

The biggest question, he said, is whether a rise in the dollar would be driven by a flight to safe assets or by signs that the Federal Reserve is responding more aggressively to economic growth.

"The direction of the currency and the rationale for the currency" are extremely important, he told Business Insider.

Doing the Fed's work

In theory, a stronger dollar would raise the prices of US exports, as dollar-denominated goods become more expensive for buyers with weaker currencies.

At the same time, it would make imports cheaper for US consumers, which is deflationary. Even lower inflationary pressure than we've seen so far this economic cycle would give the Fed more reason to be dovish and delay further interest-rate hikes.

"Do we see the Federal Reserve saying yet again 'we don't need to move on interest rates because monetary conditions in the United States have already been tightened and they're being tightened by the move in the dollar?'" Milligan said.

If the answer to that is yes, the Fed could mirror its response to the surge in the dollar from mid-2014 through 2015, when it delayed rate hikes.

Another possible beneficiary of a flight to safety in the wake of a Brexit would be US Treasurys. The recent rally in global bonds including Treasurys sent the 10-year yield to two-year lows. Some analysts attributed this to a flight to safety ahead of the referendum.

However, Milligan argued that Treasurys are instead being driven by major investors, including central banks, who find it difficult to invest in any of the nearly $8 trillion worth of government bonds with negative yields.

And while there might be some treasury buying that's part of a flight to safety, the key thing to watch is the dollar.

RELATED: See images from the UK's last election:

48 PHOTOS
UK elections - Britain's national election - polling
See Gallery
UK elections - Britain's national election - polling
Britain's Prime Minister and Conservative Party leader David Cameron and his wife Samantha leave a voting station in Spelsbury, England, as protesters demonstrate outside after they voted in the general election, Thursday, May 7, 2015. Polls have opened in Britain's national election, a contest that is expected to produce an ambiguous result, a period of frantic political horse-trading and a bout of national soul-searching. (AP Photo/Alastair Grant)
LONDON, ENGLAND - MAY 07: Voters arrive at a polling station in the Borough of Islington on May 7, 2015 in London, United Kingdom. The United Kingdom has gone to the polls to vote for a new government in one of the most closely fought General Elections in recent history. (Photo by Rob Stothard/Getty Images)
Nigel Farage the leader of the UK Independence Party (UKIP) poses for the media as he leaves after casting his vote at a polling station in Ramsgate, south east England, Thursday, May 7, 2015. Polls have opened in Britain's national election, a contest that is expected to produce an ambiguous result, a period of frantic political horse-trading and a bout of national soul-searching. (AP Photo/Matt Dunham)
Nuns leave a polling station after voting in London on May 7, 2015 as Britain holds a general election. Polls opened today in Britain's closest general election for decades with voters set to decide between the Conservatives of Prime Minister David Cameron, Ed Miliband's Labour and a host of smaller parties. AFP PHOTO / JUSTIN TALLIS (Photo credit should read JUSTIN TALLIS/AFP/Getty Images)
Labour Party leader Ed Miliband and his wife Justine leave the polling station after voting at Sutton Village Hall, Doncaster, England, Thursday May 7, 2015. Polls have opened in Britain's national election, a contest that is expected to produce an ambiguous result, a period of frantic political horse-trading and a bout of national soul-searching. (AP Photo/Jon Super)
A man leaves a polling station in Rotherwick, southern England after voting on May 7, 2015, as Britain holds a general election. Polls opened today in Britain's closest general election for decades with voters set to decide between the Conservatives of Prime Minister David Cameron, Ed Miliband's Labour and a host of smaller parties. AFP PHOTO / ADRIAN DENNIS (Photo credit should read ADRIAN DENNIS/AFP/Getty Images)
First Minister of Scotland and Scottish National Party leader Nicola Sturgeon smiles as she poses for photographers after casting her ballot in the general election at Broomhouse Community Hall in Broomhouse, Scotland, Britain, Thursday, May 7, 2015. Polls have opened in Britain's national election, a contest that is expected to produce an ambiguous result, a period of frantic political horse-trading and a bout of national soul-searching. (AP Photo/Scott Heppell)
A candidate's supporters parade in front of the polling station where Britain's Prime Minister David Cameron and his wife Samantha will vote in Spelsbury, England, in the general election, Thursday, May 7, 2015. Polls have opened in Britain's national election, a contest that is expected to produce an ambiguous result, a period of frantic political horse-trading and a bout of national soul-searching. (AP Photo/Alastair Grant)
Britain's Prime Minister and Conservative Party leader David Cameron gets in his official car after voting at a polling station in Spelsbury, England, in the general election, Thursday, May 7, 2015. Polls have opened in Britain's national election, a contest that is expected to produce an ambiguous result, a period of frantic political horse-trading and a bout of national soul-searching. (AP Photo/Alastair Grant)
DONCASTER, UNITED KINGDOM - MAY 07: Labour Party leader Ed Miliband leaves the polling station at Sutton Village Hall in Sutton after casting his vote in the 2015 general election on May 7, 2015 in Doncaster, England. The United Kingdom has gone to the polls to vote for a new government in one of the most closely fought General Elections in recent history. (Photo by Chip Somodevilla/Getty Images)
Labour Party leader Ed Miliband and his wife Justine walk to the polling station before voting at Sutton Village Hall, Doncaster, England, Thursday May 7, 2015, as Britain takes to the polls in a General election. (AP Photo/Jon Super)
A presiding officer arranges papers at a polling station set up in a launderette in Headington outside Oxford on May 7, 2015 as Britain holds a general election. Polls opened today in Britain's closest general election for decades with voters set to decide between the Conservatives of Prime Minister David Cameron, Ed Miliband's Labour and a host of smaller parties. AFP PHOTO / LEON NEAL AFP PHOTO / LEON NEAL (Photo credit should read LEON NEAL/AFP/Getty Images)
RAMSGATE, ENGLAND - MAY 07: Ukip leader Nigel Farage arrives to cast his vote for the South Thanet constituency on May 7, 2015 in Ramsgate, England. The United Kingdom has gone to the polls to vote for a new government in one of the most closely fought General Elections in recent history. With the result too close to call it is anticipated that there will be no overall clear majority winner and a coalition government will have to be formed once again. (Photo by Carl Court/Getty Images)
First Minister of Scotland and Scottish National Party leader Nicola Sturgeon speaks to the media after casting her ballot at Broomhouse Community Hall in Broomhouse, Scotland, Thursday, May 7, 2015. Polls have opened in Britain's national election, a contest that is expected to produce an ambiguous result, a period of frantic political horse-trading and a bout of national soul-searching. (AP Photo/Scott Heppell)
A voter leaves after casting his vote at the Hove Museum and Art Gallery in Brighton, southern England on May 7, 2015, as Britain holds a general election. Polls opened Thursday in Britain's closest general election for decades with voters set to decide between the Conservatives of Prime Minister David Cameron, Ed Miliband's Labour and a host of smaller parties. AFP PHOTO / GLYN KIRK (Photo credit should read GLYN KIRK/AFP/Getty Images)
GUISBOROUGH, UNITED KINGDOM - MAY 07: A man walks from a polling station at Sunnyfield House Community Centre on May 7, 2015 in Guisborough, England. The nation goes to the polls today to vote on what is said to be one of the closest General Elections in decades. (Photo by Ian Forsyth/Getty Images)
ESTON, UNITED KINGDOM - MAY 07: Voting booths are ready inside a scout hut used as a polling station on May 7, 2015 in Eston, England. The nation goes to the polls today to vote on what is said to be one of the closest General Elections in decades. (Photo by Ian Forsyth/Getty Images)
Scotland's First Minister and Leader of the Scottish National Party (SNP) Nicola Sturgeon (L) waves as she and her husband Peter Murrell cast their votes at the Broomhoouse Community Hall in Glasgow, Scotland, on May 7, 2015, as Britain holds a general election. Polls opened Thursday in Britain's closest general election for decades with voters set to decide between the Conservatives of Prime Minister David Cameron, Ed Miliband's Labour and a host of smaller parties. AFP PHOTO / ANDY BUCHANAN (Photo credit should read Andy Buchanan/AFP/Getty Images)
ESTON, UNITED KINGDOM - MAY 07: A woman walks into a polling station situated in a scout hut on May 7, 2015 in Eston, England. The nation goes to the polls today to vote on what is said to be one of the closest General Elections in decades. (Photo by Ian Forsyth/Getty Images)
British Prime Minister and leader of the Conservative party David Cameron arrives with his wife Samantha to vote at a polling station in Spelsbury on May 7, 2015 as Britain holds a general election. Polls opened today in Britain's closest general election for decades with voters set to decide between the Conservatives of Prime Minister David Cameron, Ed Miliband's Labour and a host of smaller parties. AFP PHOTO / LEON NEAL (Photo credit should read LEON NEAL/AFP/Getty Images)
A woman carrying a dog leaves a polling station in Islington, north London after voting on May 7, 2015 as Britain holds a general election. Polls opened today in Britain's closest general election for decades with voters set to decide between the Conservatives of Prime Minister David Cameron, Ed Miliband's Labour and a host of smaller parties. AFP PHOTO / JUSTIN TALLIS (Photo credit should read JUSTIN TALLIS/AFP/Getty Images)
ELLON, SCOTLAND MAY 07 : A voter makes his way to the Polling Station in the tiny fishing village of Collieston on May 07, 2015 near Ellon, Scotland. The United Kingdom has gone to the polls to vote for a new government in one of the most closely fought General Elections in recent history. With the result too close to call it is anticipated that there will be no overall clear majority winner and a coalition government will have to be formed once again. (Photo by Mark Runnacles/Getty Images)
A sign for the Crown pub in South Moreton which doubles as a polling station on May 7, 2015 as Britain holds a general election. Polls opened today in Britain's closest general election for decades with voters set to decide between the Conservatives of Prime Minister David Cameron, Ed Miliband's Labour and a host of smaller parties. AFP PHOTO / LEON NEAL (Photo credit should read LEON NEAL/AFP/Getty Images)
Members of the public vote in the Fox and Hounds pub which doubles as a polling station on May 7, 2015 in Christmas Common as Britain holds a general election. Polls opened today in Britain's closest general election for decades with voters set to decide between the Conservatives of Prime Minister David Cameron, Ed Miliband's Labour and a host of smaller parties. AFP PHOTO / LEON NEAL (Photo credit should read LEON NEAL/AFP/Getty Images)
SALTBURN, UNITED KINGDOM - MAY 07: A woman walks from a polling station situated in Saltburn Methodist Church on May 7, 2015 in Saltburn, England. The United Kingdom has gone to the polls to vote for a new government in one of the most closely fought General Elections in recent history. With the result too close to call it is anticipated that there will be no overall clear majority winner and a coalition government will have to be formed once again. (Photo by Ian Forsyth/Getty Images)
BROTTON, UNITED KINGDOM - MAY 07: St Margaret's Church in Brotton was used as a polling station on May 7, 2015 in Brotton, England. The United Kingdom has gone to the polls to vote for a new government in one of the most closely fought General Elections in recent history. With the result too close to call it is anticipated that there will be no overall clear majority winner and a coalition government will have to be formed once again. (Photo by Ian Forsyth/Getty Images)
SALTBURN, UNITED KINGDOM - MAY 07: A woman walks from a polling station situated in the local cricket club on May 7, 2015 in Saltburn, England. The United Kingdom has gone to the polls to vote for a new government in one of the most closely fought General Elections in recent history. With the result too close to call it is anticipated that there will be no overall clear majority winner and a coalition government will have to be formed once again. (Photo by Ian Forsyth/Getty Images)
A funeral home converted into a temporary polling station in Sheffield on May 7, 2015 as Britain holds a general election. Polls opened today in Britain's closest general election for decades with voters set to decide between the Conservatives of Prime Minister David Cameron, Ed Miliband's Labour and a host of smaller parties. AFP PHOTO / PAUL ELLIS (Photo credit should read PAUL ELLIS/AFP/Getty Images)
FARLEIGH HUNGERFORD, UNITED KINGDOM - MAY 07: A voter leaves a polling station located in the converted coach house in the village of Farleigh Hungerford on May 7, 2015 in Somerset, England. The United Kingdom has gone to the polls to vote for a new government in one of the most closely fought General Elections in recent history. With the result too close to call it is anticipated that there will be no overall clear majority winner and a coalition government will have to be formed once again. (Photo by Matt Cardy/Getty Images)
MELLS, UNITED KINGDOM - MAY 07: A voter leaves a polling station located in the Tithe Barn in the village of Mells on May 7, 2015 in Somerset, England. The United Kingdom has gone to the polls to vote for a new government in one of the most closely fought General Elections in recent history. With the result too close to call it is anticipated that there will be no overall clear majority winner and a coalition government will have to be formed once again. (Photo by Matt Cardy/Getty Images)
A woman pushes a trolley at a garden centre in Chessington, used as a polling station on May 7, 2015, as Britain holds a general election. Polls opened today in Britain's closest general election for decades with voters set to decide between the Conservatives of Prime Minister David Cameron, Ed Miliband's Labour and a host of smaller parties. AFP PHOTO / ADRIAN DENNIS (Photo credit should read ADRIAN DENNIS/AFP/Getty Images)
BELFAST, NORTHERN IRELAND - MAY 7: DUP Westminster leader Nigel Dodds (R) arrives at Seaview Presbyterian church polling station to cast his vote on May 7, 2015 in Belfast, Northern Ireland. The United Kingdom has gone to the polls to vote for a new government in one of the most closely fought General Elections in recent history. With the result too close to call it is anticipated that there will be no overall clear majority winner and a coalition government will have to be formed once again. (Photo by Charles McQuillan/Getty Images)
BELFAST, NORTHERN IRELAND - MAY 7: A woman casts her vote as polling gets under way at the Glen Road polling station on May 7, 2015 in Belfast, Northern Ireland. The United Kingdom has gone to the polls to vote for a new government in one of the most closely fought General Elections in recent history. With the result too close to call it is anticipated that there will be no overall clear majority winner and a coalition government will have to be formed once again. (Photo by Charles McQuillan/Getty Images)
A member (R) boxes as the public vote at East Hull Amateur Boxing Club which is being used as a polling station in Hull, Northern England on May 7, 2015 as Britain holds a general election. Polls opened today in Britain's closest general election for decades with voters set to decide between the Conservatives of Prime Minister David Cameron, Ed Miliband's Labour and a host of smaller parties. AFP PHOTO / OLI SCARFF (Photo credit should read OLI SCARFF/AFP/Getty Images)
A sign directs voters to the Ush Hair hairdressing salon which is being used as a polling station in Hull, Northern England on May 7, 2015 as Britain holds a general election. Polls opened today in Britain's closest general election for decades with voters set to decide between the Conservatives of Prime Minister David Cameron, Ed Miliband's Labour and a host of smaller parties. AFP PHOTO / OLI SCARFF (Photo credit should read OLI SCARFF/AFP/Getty Images)
Deputy Leader of the Democratic Unionist Party (DUP) and candidate for north Belfast, Nigel Dodds gestures as he waits to greet voters outside Seaview polling station in Belfast on May 7, 2015, as Britain holds a general election. Polls opened Thursday in Britain's closest general election for decades with voters set to decide between the Conservatives of Prime Minister David Cameron, Ed Miliband's Labour and a host of smaller parties. AFP PHOTO / PAUL FAITH (Photo credit should read PAUL FAITH/AFP/Getty Images)
Leader of the Liberal Democrat party Nick Clegg (R) and his wife Miriam Gonzalez Durantez arrive to vote at Hall Park centre polling station in Sheffield, England on May 7, 2015 as Britain holds a general election. Polls opened today in Britain's closest general election for decades with voters set to decide between the Conservatives of Prime Minister David Cameron, Ed Miliband's Labour and a host of smaller parties. AFP PHOTO / PAUL ELLIS (Photo credit should read PAUL ELLIS/AFP/Getty Images)
Members of the public arrive to cast their votes at a polling station in Chipping Norton town hall on May 7, 2015 as Britain holds a general election. Polls opened today in Britain's closest general election for decades with voters set to decide between the Conservatives of Prime Minister David Cameron, Ed Miliband's Labour and a host of smaller parties. AFP PHOTO / LEON NEAL (Photo credit should read LEON NEAL/AFP/Getty Images)
ELLON, SCOTLAND - MAY 07: SNP candidate for the Gordon constituency and Former First Minister Alex Salmond gives the thumbs up with first time voter Nicki Falconer, and her family, (L-R) Mackenzie, Nicki, Skye, Alex Salmond and Keiran at their local polling station in the Gordon constituency on May 07, 2015 in Ellon, Scotland. The United Kingdom has gone to the polls to vote for a new government in one of the most closely fought General Elections in recent history. With the result too close to call it is anticipated that there will be no overall clear majority winner and a coalition government will have to be formed once again. (Photo by Mark Runnacles/Getty Images)
GLASGOW, SCOTLAND - MAY 07: Leader of the Scottish Labour Party Jim Murphy gestures at a polling station to cast his vote on May 7, 2015 in Glasgow, Scotland. People across Scotland have begun casting their votes in the UK general election, with fifty nine Scottish seats up for grabs. The United Kingdom has gone to the polls to vote for a new government in one of the most closely fought General Elections in recent history. (Photo by Jeff J Mitchell/Getty Images)
Members of the public arrive to cast their votes at a polling station at a lifeboat station in Dungeness, southern England on May 7, 2015, as Britain holds a general election. Polls opened today in Britain's closest general election for decades with voters set to decide between the Conservatives of Prime Minister David Cameron, Ed Miliband's Labour and a host of smaller parties. AFP PHOTO / BEN STANSALL (Photo credit should read BEN STANSALL/AFP/Getty Images)
REDCAR, UNITED KINGDOM - MAY 07: A polling station is situated in a hairdressers salon on May 7, 2015 in Redcar, England. The nation goes to the polls today to vote on what is said to be one of the closest General Elections in decades. (Photo by Ian Forsyth/Getty Images)
Nuns leave a polling station after voting in London on May 7, 2015 as Britain holds a general election. Polls opened today in Britain's closest general election for decades with voters set to decide between the Conservatives of Prime Minister David Cameron, Ed Miliband's Labour and a host of smaller parties. AFP PHOTO / JUSTIN TALLIS (Photo credit should read JUSTIN TALLIS/AFP/Getty Images)
ESTON, UNITED KINGDOM - MAY 07: A woman walks into a polling station situated in a scout hut on May 7, 2015 in Eston, England. The nation goes to the polls today to vote on what is said to be one of the closest General Elections in decades. (Photo by Ian Forsyth/Getty Images)
GUISBOROUGH, UNITED KINGDOM - MAY 07: A sign is attached to a wall at a polling station situated in Guisborough Town Football Club on May 7, 2015 in Guisborough, England. The nation goes to the polls today to vote on what is said to be one of the closest General Elections in decades. (Photo by Ian Forsyth/Getty Images)
Debbie Carpenter, an equestrian groom, rides back to Three Oaks, a residential house where a polling station is set up in Bramshill in southern England, on May 7, 2015, as Britain holds a general election. Polls opened today in Britain's closest general election for decades with voters set to decide between the Conservatives of Prime Minister David Cameron, Ed Miliband's Labour and a host of smaller parties. AFP PHOTO / ADRIAN DENNIS (Photo credit should read ADRIAN DENNIS/AFP/Getty Images)
Returning Officer Ahmed Jamee, prepares to open a polling station at the West Blatchington Windmill near Brighton in southern England on May 7, 2015, as Britain holds a general election. Polls opened Thursday in Britain's closest general election for decades with voters set to decide between the Conservatives of Prime Minister David Cameron, Ed Miliband's Labour and a host of smaller parties. AFP PHOTO / GLYN KIRK (Photo credit should read GLYN KIRK/AFP/Getty Images)
of
SEE ALL
BACK TO SLIDE
SHOW CAPTION +
HIDE CAPTION

NOW WATCH: Scientifically proven features men find attractive in women

See Also:

SEE ALSO: Stocks are ripping higher after polls show a Brexit is less likely

Read Full Story

Sign up for Breaking News by AOL to get the latest breaking news alerts and updates delivered straight to your inbox.

Subscribe to our other newsletters

Emails may offer personalized content or ads. Learn more. You may unsubscribe any time.

From Our Partners