On Monday, the GBP/USD pair reached the lowest point over the previous 31 years; the brexit topic is escalating.
On Monday afternoon, the British Pound continues weakening against the US Dollar. The current quote for the pair is 1.3187. It’s lower than it was last Thursday, when the market emotions made the instrument plummet towards the 30-year “bottom”.
So, now it’s the second trading session after the British referendum and its shocking results. The Brits voted to leave the Union, the Outers outnumbered the Remainians by 4%, which is a good many for open voting. Bears start selling the pair last Thursday, and they are still very strong and not going to retreat. On Monday, we can see another wave of “escape from risks” in the midst of Labourist MPs’ resignations. However, the comments of Chancellor of the Exchequer, Mr. George Osborne, are staying in the shadows despite his assurances that the British economy has a lot of capacity and the Government is ready to take encouraging measures when necessary.
Today, the British government bonds yields fell to the absolute low and moved below 1%. Markets are afraid of what they cant’ see, it’s obvious.
Even with all things considered, last the UK's Central Bank announced, and said it once again this week, that it is ready to inject additional liquidity on the country’s economy if necessary. But it hardly comforts investors, who still can’t imagine what might be the outcome of the Brexit.
If one says that the United Kingdom can’t afford it, it won’t be true. The potential of the country’s economy is very high and it can deal with much more serious problems. The Central Bank is ready to act proactively. The Ministry of Finance will “smooth” the consequences. For the Britain, the overall picture looks quite alright. But the market worries about the future of the entire Europe – what if other countries, less stable but with the same ambitions, decide to exit the Union as well by the example of the United Kingdom? This is the reason why one can see keen interest in “safe haven” assets, and the Pound may continue to be sold for a while.
RoboForex Analytical Department
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