Bullet Report | The Pound gets Pounded while stocks get hammered

The Pound continues to get pounded after the country’s vote to leave the EU. During the weekend the political implications from the Brexit were significant as the Scottish National Party leader has threatened to veto a Brexit as the vast majority of Scotland voted for Remain. As a result, UK’s economic outlook was cut by Moody’s to negative. Asian stock markets are slumping while GBP has dropped a further 2% today. While EU leaders were united in urging UK to start the exit process as soon as possible, the messages from UK are different. Pro Brexit leader Boris Johnson wrote in the Daily Telegraph saying that there was “no great rush” to leave EU and there will “continue to be free trade, and access to the single market”.

Currencies: JPY and USD opened the week higher while EUR and commodity currencies are pressured. GBPUSD has slid further and back to a 31 year low, reflecting the bearish mood of investors after UK opted to exit the EU. The GBP dropped as much as 11% on Friday reaching a low of 1.3228, experiencing its worst single day perfromance since 1992. The dollar index rose 3%. If sustained, that would be its biggest daily gain since 1978.

Stocks: Last Friday will become known also as Black Friday as the global stock markets were melt down. In the US, Stock markets dropped over 4% while the picture was even worse in Germany and France where regional indexes closed the day with over 8% in the red. Surprisingly, UK’s FTSE where all the drama has started from, withheld loses to only -2.5%. Overnight, shares in Asia are mixed with Nikkei bouncing 2.39% while other regional indexes are still struggling.
Oil and Gold: The price of oil has dropped, extending the sharp declines after UK’s result. Financial markets plunged on Friday and as a result Brent futures were down to $48.26. While equity and currency markets plunged, analysts said that Britain’s vote to leave the EU would not have a big effect on fundamental oil demand. “If we assume a 2 % drop in UK GDP in response to the exit vote, which is on the high end of our economists’ estimates, then UK oil demand would likely be reduced by 1 % or 16,000 barrels per day, which is a 0.016 % hit to global demand,” said Goldman Sachs. Gold on the other hand, rose as the negative sentiment in stock markets is always beneficial for the yellow metal.

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Source: Easy Forex Forex.Info