Friday, 24 June 2016

#UKReferendum: #UK Leaves EU #Brexit

The U.K. has voted to leave the European Union, local broadcasters forecast early Friday morning, taking most traders by surprise and sparking mayhem in financial markets.

Both ITV and BBC said just before 5 a.m. local time, or midnight Eastern time, that they predict “leave” has won the closely watched Brexit referendum.

The Sky News results tracker also put the exit side ahead with 51.7% versus 48.3% for the “remain” side, with 337 out of 382 counting areas having declared results.

The call for the Brexiteers’s victory comes after a dramatic and tense night, where opinion polls and early counts initially put the “remain” side ahead. Later in the night, however, the results started to show a strong showing for the exit camp, sending the pound sharply lower.

Sterling GBPUSD, -9.9166%  dropped almost 10%, trading below $1.35 for the first time since 1985. Futures for the FTSE 100 index UKX, +1.23%  slumped 7% to 5,848.

“Panic, volatility and risk-off best summarized the trading session in London overnight,” said Ipek Ozkardeskaya, senior market analyst at London Capital Group, said in a note.

“Moving forward, attention will shift to the Bank of England. The markets could need a hand to go through a historical moment. Quick measures should be put in place in order to fight the excessive volatility in the pound, the stock and the bond markets. This being said, given the low-to-negative rate environment in the U.K. and across the eurozone, the BOE’s maneuver margin is disturbingly narrow,” she added.

The final result — expected around breakfast time in the U.K. — will mark an end to four months of fierce campaigning that has unleashed an emotional public debate about immigration and the future of the U.K. economy.

Brexiteers have argued the U.K. would be better off free from Brussels’s regulatory restraints and that cutting ties with the EU is the only way the country can control immigration. The “remain” camp, on the other hand, has warned that a goodbye to the union would trigger a wave of economic uncertainty, possibly plunging the U.K. and other European economies into recession.

“I can’t overemphasize how important this vote is for the markets,” said Marshall Gittler, head of investment research at FxPrimus in a note.

“The initial problem is the uncertainty that Britain leaving the EU would cause. With no trade agreements with its major trading partner, the U.K. economy would suffer a major shock,” he added.

Head of the International Monetary Fund Christine Lagarde has also warned a Brexit would have “pretty bad to very, very bad” consequences for the global economy, while Finnish finance minister Alexander Stubb, said it could be “Europe’s Lehman moment.”

No comments:

Post a Comment