London bankers have rarely witnessed the scale of the volatility that is sweeping through Britain’s financial markets. If British voters choose to remain within the EU, the market could perhaps reverse the losses, however if Brexit were to happen … Britain would have to make much efforts in rising from its grave.
With the very real possibility of Britain leaving the safe havens of the European Union, British markets are mirroring the crash of the Chinese economy, with the Sterling set to make a new record for its biggest ever one-day-fall. UK stock futures have also collapsed just after the market opened, as England waits on its citizens to chart the course of its history.
Earlier the pound had hit its 2016 zenith by $1.50 with an opinion poll showing a 52% to 48% outcome in favor of ‘Remain’. But as counting began, the pound fell sharply as it is becoming increasingly clear that the historic final outcome could be much, much closer, or god forbid, even reverse.
According to Reuter’s calculations, with the results streaming in from 150 out of 382 counting areas and partial tallies from Northern Ireland, the ‘Remain’ votes amounted to 48.9%, with the ‘Leave’ gaining momentum at 51.1%.
The Sterling fell almost vertically by over 6% to levels greater than ‘Black Wednesday’ in 1992 and that of the 2008 global financial crisis. London bankers who have worked throughout the night, said they haven’t seen such high volatility in the British market across all of its assets.
“It’s extraordinary,” said John Wraith, Head of UK Rates Strategy, UBS Investment Bank. ” ‘Shock’ probably isn’t too strong a word. People will come in this morning earlier than usual, so it’s a skeleton staff right now. But shock was the first reaction. Now it’s all hands on deck trying to deal with the volatility”.
When the ‘Remain’ fought back and gained some ground, both the stock futures and the sterling recovered some lost ground. However, traders are on a knife’s edge as the fog of war on the results are expected to be cleared only around 0600 GMT.
“Markets are very nervy at the moment,” said Joe Rundle, head of trading at ETX Capital in London.
He went on to add, “It’s definitely tin hats time. If Leave wins there will be carnage for cable,” in reference to the exchange rate of the sterling and the dollar.
The referendum on whether to stay within the safe confines of the European Union or to quit has been a bitter contest and has polarised the nation, leaving financial markets, not only in Britain but worldwide, on an edge.
Many banks have already warned their clients about the volatile trading conditions. The final outcome could potentially result in large gaps in prices. Barclays has already issued a notice for not accepting new “stop loss” orders as of 0600 GMT.
The move is significant and is indicative of the weight of responsibility British voters have in their hands. With their votes they will now chart Britain’s future.
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