The big question for pound traders may have been answered, but the outlook for the currency is murkier than ever.
Sterling dropped 3 percent to $1.3275 at 11:05 a.m. in London on Monday, after reaching a three-decade low of $1.3222 that surpassed its weakest level reached in the immediate aftermath of the vote to leave the European Union. The extra losses added to the unprecedented 8.1 percent tumble on that day, which was almost double the 4.1 percent decline on Black Wednesday in 1992, when the U.K. was forced out of Europe’s exchange-rate mechanism.
Gains in U.K. government bonds pushed the 10-year gilt yield below 1 percent for the first time on Monday, the FTSE 100 Index of stocks slid 1.2 percent, and Barclays Plc and Royal Bank of Scotland Group Plc fell more than 10 percent.
Source: Bloomberg (27 July 2016)