Pound Still Dropping, Gold and Yen Gain Amid Brexit Tumult

The impact from Brexit - which has already generated much turmoil in global equity, commodity and bond markets – continues to grow and its negative effect on world currencies and equity markets is only beginning to be felt.

The pound slumped back toward a 31-year low pulling down the euro as a UK exit cast doubts on the future of the European Union.

Sterling was down 2.3 percent at $1.3381 close to the $1.3228 plumbed on Friday, its lowest since 1985. The pound dropped as much as 11 percent on Friday as positions betting on Britain remaining in the EU were reversed.

The yen strengthened 0.3 percent to 101.89 per dollar, jumping 3.9 percent in the last session and climbing as high as 99.02, the strongest since 2013. Finance Minister Taro Aso told reporters Monday that Prime Minister Shinzo Abe has asked for various measures to stabilize Japanese markets.

The yuan fell 0.2 percent after China’s central bank weakened the currency’s reference rate by 0.9 percent, the most since the aftermath of August’s devaluation. The Canadian dollar dropped 0.4 percent as the currencies of Australia and New Zealand, which are also heavily exposed to commodity markets, weakened at least 0.7 percent.

Stocks/Commodities

The MSCI Asia Pacific excluding Japan Index fell 0.6 percent as benchmarks retreated in Hong Kong, Singapore and South Korea. Japan’s Topix advanced 1.3 percent, after plunging 7.3 percent on Friday.

Futures on the FTSE 100 Index tumbled 3.2 percent, while contracts on the S&P 500 lost 0.4 percent.

Gold jumped almost 5 percent to its highest price in almost two years, while 10-year U.S. Treasury yields tumbled 19 basis points, their biggest one-day decline since 2009. Gold for immediate delivery gained another 0.7 percent on Monday, set for its highest close since July 2014.

West Texas Intermediate crude fell 0.6 percent to $47.37 a barrel, after a 4.9 percent slide on Friday that marked its biggest loss since February.

Cina Coren
Cina Coren is a former Wall Street broker and financial advisor. She holds a Master's degree in Communications and spent many years writing for international news outlets and journalistic publications. Today, Cina spends most of her time writing internet articles and blogs, and reading various newspapers to stay on top of the news.