Sterling Extends Losses as Brexit Ripples Linger

Market Trends - 27/06/2016

The British pound came under intensified selling pressure on Monday after the markets reopened following the weekend. In early trading, the British pound fell -2.75% against the US dollar to float at 1.33, while the euro, which had a more muted reaction to the referendum fell -0.70% against the US dollar to trade at 1.104. On Monday, Chancellor of the Exchequer George Osborne issued a statement saying that the Treasury, Bank of England and the Financial Conduct Authority spent the last few months putting robust contingency plans in place to contain the aftermath of the Brexit referendum. His comments managed to stem the sterling's declines momentarily. Analysts and economists agree that the British pound could see much further declines in the coming weeks.

Following the British Prime Minister's resignation on Friday, the UK's top leadership failed to come to a consensus on filling his shoes, with deep cracks emerging in nearly all political parties. Meanwhile, the EU was divided as well, with some leaders calling for a swift exit from the EU and calling on PM Cameron to invoke Article 50, while German Chancellor Angela Merkel urged leaders on both sides to take a more orderly approach and facilitate a smooth transition.

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