Following on from last week's historic vote, Pound sterling continues to weaken with a number of key questions still in place. EU leaders are pushing for the UK to trigger article 50 before the new Prime Minister is elected.
In all of its trading history between Sterling and the Euro the markets have never moved by so much in a single day. We have seen big movements for Sterling during the period of the credit crunch, the Scottish referendum and various general elections but nothing like what happened on Thursday night into Friday morning. The losses for Sterling were catastrophic and against the US Dollar the Pound fell by as much as 10% from the close of business the day before.
The vote to Leave won with 51.9% compared to the Remain vote at 48.1%. Even on Thursday night the odds being offered by the bookies were 10-1 on so the vote shocked the markets.
Moody’s has downgraded the UK’s credit rating from stable to negative in the wake of the vote and stated that the result would cause a ‘prolonged period of uncertainty.’ This could cause further problems for the British economy as in theory the worse a credit rating means that it becomes more expensive for that country to borrow money.
Prime Minister David Cameron has announced his resignation and he will be leaving his post in October and this will result in more uncertainty for the British economy whilst the successor will be found.
In Scotland the vote to Remain was huge and now there is talks of a possible second referendum regarding independence. It is clear that Scotland want to remain part of the EU and as Britain as a whole has chosen to vote out there is clear divide that has emerged. There has even been talk of Ireland uniting in the wake of the decision.
Various members of the Labour party have resigned with more expected as they have lost faith in current leader Jeremy Corbyn. I would not be surprised to see him leave his post in the near future as both major political parties go into a period of huge uncertainty.
On Saturday EU leaders have been calling for negotiations to begin as soon as possible regarding the exit of the European Union for the UK. A meeting between the other 27 EU leaders will take place on Wednesday to discuss the Brexit and David Cameron is not invited.
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