British Pound And Equities Reel More Under Brexit Pressure as Oil Zags

British Pound And Equities Reel More Under Brexit Pressure as Oil Zags

The steep sell-off in sterling persisted today as the pound struggled to position above its 31-year low against the U.S. Dollar (CURRENCY:USD). New lows below $1.32 were reached this morning. Bearishness in the pound is reflective of the dampened outlook for the currency after Britain announced its intention to part with the European Union after the referendum last week.

Pound under extreme pressure

The euro also encountered weakness, helping a rally in safe assets such as the Swiss franc and the yen. GBP/USD (GBPUSD) fell as low as $1.3188 while EUR/USD (EURUSD) erased 0.74% of gains to $1.1034. USD/JPY (USDJPY) also tumbled 0.22% to 101.99 yen per dollar during late Asian trade. Traders have factored in the reduced possibility of any rate hike by the Federal Reserve this year, which led to weakness in the greenback.

Equities extend losses; oil recovers

Except China and Japan which gained today, other Asian markets witnessed more declines following the Brexit vote last week. Nikkei 225 (INDEXNIKKEI:NI225) gained the most, adding 2.39% to 15,309.21 while Shanghai SE Composite Index rose 1.45% to 2,895.70. However, European markets were restless, reacting to aftershocks from Britain’s vote to leave the EU. Efforts by the European Central Bank to calm down market nerves proved to be ineffective for European traders. Both travel and banking stocks led indices lower with FTSE 100 (INDEXFTSE:UKX) down by 1.44% to 6,050.31 and DAX (INDEXDB:DAX) erasing 1.20% to 9,442.42.

Oil recovered somewhat from Friday’s Brexit event to add some gains but those were quickly reversed back down. Brent Crude rose 0.48% to $48.64 a barrel but has since settled to $48.07 and West Texas Intermediate Crude oil jumped 0.15% to $47.71 but is now back down to $47.21. Analysts continue to claim that Britain’s decision to exit the EU will have a negligible impact on physical oil trading. Morgan Stanley (NYSE:MS) highlighted that global supplies and China’s demand would hold more relevance for the direction of oil prices than Brexit.