The Referendum Dawns for the British Pound
Posted by Allison on 29 June 2016, 12:21
After waiting and speculating on the possible result for what seemed like months, the referendum on the UK’s membership of the EU finally took place. Brexit was the result, and the effect on the British pound would now be seen.
An overview of the currency markets for June 20th – June 24th 2016
The week dawned with positive news for the British pound, at least against the US dollar. It began trading on 1.4287 before rising significantly to close on 1.4645 on Monday night. It did well again on Tuesday, rising further to 1.4740. A marginal drop to 1.4692 followed the day after, before the pound finished the day of the referendum on 1.4869. The Brexit result then sent shockwaves around the world, resulting in a significant drop on Friday, as the pound finished on 1.3704 – a drop of 0.1165 in one day.
The same pattern would be seen again where the euro was concerned – perhaps not entirely surprising given that we are looking at the single European currency now. The pound opened on 1.2695 this week, and had an excellent day on Monday, rising to 1.2924 as a result. It reached headier heights the day after, achieving a closing rate of 1.3028. There were a couple of days where it remained at around the same level, before dropping on Friday to finish the week on 1.2383. However, this was mitigated slightly by the fact it had risen sharply earlier in the week – perhaps when a vote to remain was suspected to win.
Over in Hong Kong, a similar picture was borne out. The pound began on 11.087 and rose to 11.364 on Monday. A new height of 11.436 was achieved the next day, and then the ups and downs began. From 11.397 on Wednesday to 11.534 on Thursday, it was clear we were in for a seesaw week. And then of course the predicted dip came on Friday as the pound fell back to 10.636.
So would anything different occur when we compared the pound to the New Zealand dollar? We began here on 2.0260 and reached a high for the week of 2.0595 on the following day. We didn’t do badly up to and including Thursday, which saw a day-ending rate of 2.0579. However, the effect of Brexit meant we did experience a significant dip on Friday, which was to be expected. This meant we closed the week on 1.9334.
We could therefore expect much of the same from the pound’s head-to-head with the US dollar as well. This was indeed the case, as we started on 1.9339 and moved up steadily over the first two days, closing Tuesday night on 1.9637. We held steady for two days, then, before dropping to 1.8464 following the result of the vote.
Notable events in the world of currency
A drop against the Canadian dollar
Of course there would be drops elsewhere as well, which was only to be expected. The pound fell from 1.8432 to 1.7822 against the Canadian dollar over the course of this week.
Another drop came against the Swiss franc
Here too we had a similar result, as the pound began trading on 1.3733 on Monday morning and finished Friday evening on 1.3384.
More of the same against the Icelandic krona
Even other currencies like the krona managed to come out on top this week. The pound started on 176.199 here and finished up lower on 170.775.
So it came to pass that Brexit was the result, although even now as we write this, some are talking of ignoring the vote or trying to undermine the will of the people. This will certainly not do the pound any good, so we must watch closely from now on to see what happens next, and where we will go from here. Pulling together and respecting the result is the best course of action to move ahead in a positive manner. Let’s hope we do just that.