Pound Revives As Market Consolidates Following Brexit Outcome

Pound Revives As Market Consolidates Following Brexit Outcome

Riskier currencies such as the pound sterling and Australian dollar registered mild gains during Asian trade today on the back of growing expectations that central banks will take coordinated steps to support markets following Brexit.

Pound comes back to life

Such expectations helped sterling to gain traction against the U.S. Dollar (CURRENCY:USD). However, risk sentiment is still too fragile to confirm the trend. GBP/USD (GBPUSD) rose 0.53% to 1.3294 and EUR/USD (EURUSD) added 0.33% to 1.1059. USD/JPY (USDJPY), which has shed substantially since Friday’s vote, advanced 0.12% to 102.12. Morgan Stanley currency strategist Hans Redeker opined that markets are moving towards consolidation after posting steep losses in the follow-up to Brexit.

Equities and oil advance

There is an air of calm around Asian markets, which appeared stabilized to an extent after an aggressive sell-off. Equities across Asian markets opened on a low note, but managed to finish in the green, led by bargain hunting. China’s Shanghai SE Composite Index inched up 0.58% to 2,912.56 while Taiwan’s TSEC 50 Index closed the day 0.55% higher at 8,505.51.

Like their Asian counterparts, European equities also recorded gains for the first time in three days, driven by higher oil prices and expectations that central banks will act to prevent bigger losses. The CAC 40 (INDEXEURO:PX1) opened 2.72% higher at 4,093.18 while EURONEXT 100 (INDEXEURO:N100) followed the suit by adding 2.57% to 816.04.

Oil extended gains today in anticipation of supply tightening that may stem from a looming strike at Norwegian oil and gas fields. Brent Crude jumped 2.15% to $48.21, and West Texas Intermediate Crude oil rose 2.35% to $47.42. Carsten Fritsch, analyst at Commerzbank, stated that oil prices are recovering due to bargain hunting as well as ahead of a potential strike in Norway. Moreover, traders also digested the fact that Brexit is not likely to disturb supply and demand aspects of the oil market.