The British pound sterling once again came under pressure today as it was forced back down below 31-year lows. Although it managed to trim early day losses, it continues to trade below the $1.30 level on the back of growing concerns over the consequences of Brexit.
Pound retests 31-year lows
GBP/USD (GBPUSD) remained 0.61% lower at 1.2938 during the late Asian trade. Outlook for Sterling dampened after the Bank of England raised concerns about the risks that confront the financial stability of Britain as a result of the Brexit vote and extreme easing of monetary policy. The pound’s losses turned into gains for the Japanese yen, which hit three and a half year highs. USD/JPY (USDJPY) slipped 1.18% to 100.54 and EUR/USD ( EURUSD) fell 0.24% to 1.1048.
Stocks in red
Except for China’s Shanghai SE Composite Index, Asian markets nosedived on revived Brexit fears. The Brexit vote has triggered unrest among traders, who believe that other nations might also follow in the footsteps of Britain to leave the EU. HANG SENG (INDEXHANGSENG:HSI) dipped 1.24% to 20,493.13 while Nikkei 225 (INDEXNIKKEI:NI225) fell the most to 15,378.99, erasing 1.85%.
European markets were no less volatile as all major indices opened sharply lower. The decline in the U.S. government yields made traders anxious. DAX (INDEXDB:DAX) registered a fall of 1.92% to 9,349.89, followed by CAC 40 (INDEXEURO:PX1) that lost nearly 1.70% to 4,093.
Oil also traded down while supply risks further blocked buying interest. A recent rebound in oil met with disappointment after OPEC recorded its highest output in June following recovery of oil supplies from Nigeria, Iran, and other Persian Gulf countries. Coupled with this, oil inventories are also projected to be rising in the U.S., according to Genscape, a market intelligence firm. Brent Crude fell 0.79% to $47.58 and West Texas Intermediate Crude oil slumped 0.67% to $46.29 during European hours.