- UK currency hits the rocks after voting outcome – Leave lead after incorrect polls
- PM Cameron resigns – Next UK PM remains uncertain
- US Dollar jumps against peers – Safe-haven demand extremely high at present
- Uncertainty to remain protracted over UK economy – US contributions due this afternoon
The Pound has dived spectacularly against the US Dollar today, in the aftermath of the UK’s majority vote to leave the European Union.
The US Dollar has been soaring in contrast, having been raised in appeal significantly by renewed demand for safe-haven currencies.
UK Economic News: Sterling Takes a High Dive on UK’s Vote to Exit the EU
With the results now in and showing a majority ‘Brexit’ vote, the Pound has made a catastrophic crash against the US Dollar and all other peers; as was forecast in the event of such an outcome.
Among the worst of the losses seen for the Pound have been slides of -4.7% against the US Dollar, -9.8% against the Qatari Riyal (GBP/QAR) and -10.5% against the Egyptian Pound (GBP/EGP) and the Omani Rial (GBP/OMR).
These are historic losses for the Pound, with most declines not being seen since 1985. Additionally, on the stock markets, the FTSE 100 index has fallen by over -8%, which was the biggest single fall seen since the late 2000’s financial crisis.
When it became clear that his position had become untenable, Prime Minister David Cameron announced his resignation in the morning, a move that did nothing to calm the roiling markets.
Speaking outside Number 10, Cameron said:
‘I do not think it would be right for me to be the captain that steers our country to its next destination. I love this country and I feel honoured to have served it and I will do everything I can in future to help this great country succeed’.
US Dollar in High Demand as Safe-Haven Currencies Soar
The ‘Buck’ has been on strong form today, with gains stemming from the fact that a Pound crash has catapulted safe-haven currencies such as the US Dollar and the Japanese Yen into the spotlight.
Among the highest of the Dollar’s advances today have been gains of 3.9% against the Polish Zloty (USD/PLN) and 4.9% against the Pound (USD/GBP), although owing to the Yen being in greater demand, the US Dollar has fallen by -1.8% in the ‘Ninja’ pairing (USD/JPY).
Last night, Fed policymaker Robert Kaplan spoke about the possible outcomes of the Referendum vote, stating that a ‘Brexit’ vote could harm international trade and the global economy by extension.
Future GBP, USD Forecast: Sterling Recovery Unlikely to Kick In Until Coming Week
Looking ahead, the Pound cannot be expected to make any possible positive movement against the US Dollar in the near-term, owing to the fact that confidence in Sterling is at an all-time low.
Later on today for the US, the May durable goods orders results will come in, along with the University of Michigan confidence score for June.
Orders are forecast to drop from 3.4% to -0.5%, while confidence has a similar decline in store from 94.3 to 94.1.
Current GBP, USD Exchange Rates
The Pound Sterling to US Dollar (GBP/USD) exchange rate was trending in the region of 1.3904 and the US Dollar to Pound Sterling (USD/GBP) exchange rate was trending in the region of 0.7194 today.
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