Panic, volatility and risk-off best summarized the trading session in London overnight. So far, Britain appears to have decided to ‘Leave’ the European Union. The pound lost more than 10% against the US dollar, the FTSE futures trade 9% lower.
The euro-pound cleared 0.80 resistance and is presently gaining momentum toward the 0.85 mark. The rush to safe haven assets sent gold to $1358, the yen traded at 99 per dollar as Nikkei stocks wrote-off 7% in Tokyo.
Latest estimations favour the Brexit.
Moving forward, attention will shift to the Bank of England. The markets could need a hand to go through a historical moment. Quick measures should be put in place in order to fight the excessive volatility in the pound, the stock and the bond markets. This being said, given the low-to-negative rate environment in the UK and across the Eurozone, the BoE’s manoeuvre margin is disturbingly narrow.
Political and financial uncertainty, high volatility, choppy market conditions are on the menu.