Referendum aftermath

27 June, 2016

Rob Bastin

After one of the biggest decision in the history of our country was finalised last week, the aftermath of the vote to leave the EU carries only one certainty, and that is uncertainty. For most people this decision will not be felt or seen for a couple of years as the early stages of reforming both the country and the government get underway. The currency markets however are still digesting the UK market crash where Sterling dropped around 10% against most currencies in just a matter of hours, shortly followed by a similar drop in the FTSE Index and large depreciation of UK bank shares. Rates managed to make some recoveries during Friday’s trading but this will largely be attributed to profit taking from the overnight move. The current market conditions are unprecedented and represent some of the highest levels of volatility ever experienced.

Volatility can provide significant opportunity but at the same time significant risk. Whether you are looking to buy or sell Sterling in the months to come, there will likely be short term opportunities to try and maximise either of these requirements if timed right. Where the pound will go from here is about as uncertain as where our country will go from here, but bear in mind that economic and indeed political uncertainty is one of the single most off putting factors for investors, so it is very difficult to see where are support for the pound will come from for the rest of 2016. To help trade in these market conditions Currency Index offers both STOP and LIMIT orders that will ensure you capture the rate you want should the market present it, regardless of the time of day or night, whilst also being able to manage the risk should the market go the wrong way for you.

The Week Ahead
The volatility is expected to continue into this week, that is otherwise relatively quiet for data releases that I expect will still have minimal impact amongst the noise of buying and selling post referendum. For guidance in these turbulent markets, make sure you contact your account manager today to discuss your upcoming requirements and best options available to you. Below are the few announcements this week to keep an eye on:

1:30pm – US Gross Domestic Product
3:00pm – Consumer Confidence

9:30am – UK Gross Domestic Product
10:00am – Euro-zone Consumer Price Index
12:30pm – ECB Monetary Policy Meeting Accounts

9:30am – UK Manufacturing PMI
10:00am – Euro-zone Unemployment rate
3:00pm – US Manufacturing PMI