June 24, AtoZForex – The official results of the EU referendum are here! The United Kingdom is out of Eurozone with David Cameron leaving his position. The value of GBP has fallen drastically – more than 10% and it is the lowest now since 1985. The currency is trading at the moment $1.32270 against the US dollar. Amid this turmoil, the Bank of England (BoE) has promises to financial stability, announcing to implement extensive contingency plans.
BoE promises financial stability for the United Kingdom
In the official statement the Bank of England (BoE) commented:
“It has undertaken extensive contingency planning and is working closely with HM Treasury, other domestic authorities and overseas central banks. The Bank of England will take all necessary steps to meet its responsibilities for monetary and financial stability.”
Additionally, the vote has raised the opportunity for the extreme volatility in other financial markets when they open later today. Also, FTSE 100 Index have been dropped 8 per cent. As BoE promises financial stability for the UK, Mike Van Dulken of Accendo Markets also comments on this matter:
“We expect the hardest hit stocks to be financials – banks, insurance – followed by housebuilders, with commodities related-names – miners, oil – following close behind.”
Doubts on UK stock market operations
Some financial analysts were questioning the fact whether the UK stock market will be able to open on time after volatile Japanese trading overnight, which was triggered by the referendum vote count. The volatile trading in Japan has caused the automatic trading circuit breakers on the Nikkei Index.
Furthermore, covering the UK vote results impact on the price of gold, it is necessary to mention that this morning it went up to $1330 per ounce, from the $1265-point yesterday.
As it was commented by the rating agency S&P, they believe that following the UK vote will strip the UK government debt of its AAA rating. This can put further pressure on sterling.
How the events were developing last night?
As the official information about the UK leaving Eurozone was published, the sterling was sent down to $1.33. The referendum has lowered the value of the British pound to its weakest level against the US dollar, reaching 31 year low.
As for the yesterday night development of the events, the value of the British pound went high to $1.50 after polls were released after 10 PM has shown the Remain lead. But this trend has changed as the actual results have come in, with the pound dropping 11 per cent within hours. This is recorded as the biggest intra-day swing.
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