World Economy

Sterling Descends Over Brexit

Sterling Descends Over BrexitSterling Descends Over Brexit

The British pound traded near $1.39 for the first time in seven years on Wednesday, while the cost of hedging against sharp swings jumped to their highest in more than four years as concerns that Britons could leave the European Union deepened.

The latest poll showed the “in” camp is ahead in a referendum to be held in June but the gap has narrowed. Support for staying in stood at 51%, while 39% wanted a so-called “Brexit” and 10% were undecided, according to the ComRes poll for the Daily Mail.

Sterling fell to $1.39 with chartists now targeting the low of $1.35 seen in 2009. The currency has come under attack since the start of the week, shedding 3% after several senior members of the ruling Conservative Party threw their weight behind the campaign to leave the European Union over the weekend.

The euro was 0.3% higher at 78.82 pence although the single currency has been held back on worries that the eurozone itself could face a period of uncertainty if Britain chose to leave the union.


European stock markets turned lower on Wednesday as oil prices extended the overnight slide on fears whether a joint OPEC and non-OPEC effort could indeed happen.

The Euro Stoxx 50 index was down 0.96%. Germany’s DAX and France’s CAC were down 0.90% and 0.70% respectively. UK’s mining heavy FTSE index was down 0.70% as well.

Germany’s BMW ST Shares were down 2.1%, followed by a 1.8% drop in Deutsche Bank shares. Shares in UK’s Standard Chartered were down 5.63% as well. BHP Billiton and Norway’s Seadrill shares dropped 4.3% and 3.1% respectively.

Risk sentiment soured as oil benchmarks dropped at least 1.5%.


Asian shares also extended its drop on Wednesday. Following its 5.8% drop on Tuesday, crude oil dropped further today to $31.06 a barrel from the opening at $31.26, pushing energy shares lower.

Markets should not view the output freeze deal between Saudi Arabia, Russia, Venezuela and Qatar as introduction to production cuts, Saudi Oil Minister Ali Al-Naimi said on Tuesday.

Japan’s Nikkei 225 index subtracted 0.85% to end the session at 15,915.79, as the yen strengthened against the dollar.

The yen is meanwhile trading slightly higher versus the green currency at 111.98, compared to the session’s opening at 112.07.

The Shanghai Composite Index edged up 0.88% to 2,928.90, while Hong Kong Hang Seng index descended 1.15% to end the session at 19,192.45.

Australia’s S&P/ASX 200 was 2.10% down to 4,875.00. South Korea’s KOSPI index dipped 0.09% to 1,912.53.