The bottom has fallen out from the market as the British pound is moving below 1.35 to the U.S. dollar. The overall vote is still close with 51.4 per cent voting for the leave camp, but the number of regions that have not reported yet is rapidly declining. The hopes for a vote against Brexit are now pinned on London, which is full of sleepless traders rolling their eyes at their screens.
The GBP/USD is currently trading at 1.3450 with some experienced traders sharing with Finance Magnates that the bottom has fallen off from the market and that the decisive break below 1.3400 could open a move towards 1.2000.
Amid all of this turmoil, the forex industry continues to be faring very well with some systems stretching, but the hikes in margin requirements are working to the advantage of both traders and brokers.
Nikkei 225 futures are trading lower by 8 per cent, Prudential is trading lower by 10 per cent in Hong Kong trading. The FTSE 100 futures are lower by 7.5 per cent as of writing, while even emerging markets currencies which typically underperform during global risk-off scenarios are rallying against the British pound. Shares of HSBC have fallen in Hong Kong trading over 9 per cent.
Macro Strategist at Society Generale, Kit Juckes, has expressively commented on his Twitter profile about the current market situation describing it as “the sky falling on our heads”.
day after day, we looked up and worried that the sky might fall on our heads. And then one day…. it did https://t.co/ciBCZb6gkc
— Kit (@kitjuckes) June 24, 2016
Everybody was wrong on this – even Nigel Farage’s friends from the financial industry who conducted their own exit polls, prompting him to concede defeat two times earlier this morning. The odds on the outcome of the vote at bookmakers has also shifted full swing starting from just above 11 per cent Brexit odds after the polls close and reaching 94 per cent as of writing.
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— Holger Zschaepitz (@Schuldensuehner) June 24, 2016
The official open of the markets in Europe is likely to trigger some circuit breakers and possibly coordinated action from central banks. The Bank of Japan could be on the phone line with major counterparts and is very likely to be already running active market operations as the rate in the USD/JPY pair spiked higher from 99.00 to trade just above 101.50 as of writing.
The CEO of Merk Investments, Axel Merk, has a rather unorthodox suggestion for the London based financial industry posted on his Twitter account.
How about London splits from UK and joins EU as separate state?
— Axel Merk (@AxelMerk) June 24, 2016
While London is not likely to leave the U.K. a second referendum in Scotland on leaving the United Kingdom is a virtual certainty due to the outcome of the vote in the Lowlands and the Highlands.