Stock markets around the globe plummeted on Friday in the aftermath of the UK Referendum result of leaving the EU. Sterling also fell considerably, by up to 11%, as markets continue to grapple with the uncertainty that the vote decision has brought about. With a 52-48 decision to leave the EU, global markets are wary of the shockwaves, although it will be some time before we can really see the economic impact of the vote.
With the Mayor of London, Sadiq Khan, having put on the top of his priority list renegotiations on the UK to passport its services to the EU, events that unfold in the talks between the UK and EU member states will be crucial in determining economic health for the long term. Sterling has opened slightly lower this morning and GBPEUR has moved under the 1.22 level while GBPUSD languishes below the 1.35 level.
US dollar favoured as a safe haven currency
The US dollar has continued to be favoured as a safe haven currency and maintains its strength in the midst of all the uncertainty that the UK vote has produced. With stock markets fragile too, the Federal Reserve are also likely to hold off from increasing interest rates in the near future with a close eye on future developments.
Fed Chair Janet Yellen and ECB President Mario Draghi are due to address the gathering in Portugal where the European Central Bank are holding a three- day meeting. On the economic calendar today, we have a fairly quiet docket with US services PMI data coupled with the Dallas Fed manufacturing business Index for interim direction; though the developments in the aftermath of the UK vote is set to dominate world markets.
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