Sterling continues post-Brexit slide as markets open in Asia

The results sent the British pound sliding.

British 10-year government borrowing costs sank below 1 per cent on Monday for the first time ever and sterling tumbled to a fresh 31-year low against the dollar as investors bet Britain’s vote to leave the European Union will trigger a Bank of England rate cut.

Britain’s economy is “as strong as could be”, he said.

Screens, one of which displays the rate of the British pound which drops against the U.S. dollar (R) after the British referendum, are seen in a trading room in Paris, France, June 24, 2016.

Sterling skidded to a new trough of US$1.3121, its lowest level against the dollar since September 1985, before rebounding somewhat. Analysts predicted more downside for sterling as traders monitored the fallout of the vote and how it would affect the European economy.

He also said there was “a huge concern that London’s status as the global financial capital will crumble” if it losses its “passporting” rights, which permit banks to locate themselves in the United Kingdom while offering products and services in the wider EU.

Investors were also shifting out of other higher-yielding, riskier currencies, which took a hammering last week.

However, it was still down 2.9% at 1.327 USA dollars.

Gold XAU= , one of the rare outliers in global financial markets in the last few days, came in for a bit of profit taking with the precious metal down 0.3 percent. The Shanghai Composite Index in mainland China climbed 0.6 percent to 2,912.56 while Australia’s S&P/ASX 200 slipped 0.7 percent to 5,103.30.

There were also gains for Singapore, Wellington, Taipei, Jakarta and Bangkok.

On Wall Street, the Dow .DJI rose 1.57 percent, while the S&P 500 .SPX gained 1.78 percent and the Nasdaq .IXIC 2.12 percent.

Hong Kong’s Hang Seng fell 0.7 per cent to 20,112.35 and Seoul’s Kospi lost 0.1 per cent to 1,923.13.

US stocks followed plunging global markets.

When it comes to the effects on broader economies, Morgan Stanley has some projections for Asia.

“We think near-term focus of policymakers will be to mitigate adverse impacts on financial conditions”.

“We were prepared for the unexpected and we are equipped for whatever happens”. Volatility is expected in response to the two-day EU Leaders summit and the European Central Bank President’s speech, both which will commence later on in the day.

However, Japan’s Nikkei 225 .N225 closed 2.4 percent higher after government officials stepped up warnings that they could intervene in currency market to stabilize the yen, whose strength harms exporters.

“It’s going to be a very tough week. It will be a really volatile week”.

A lack of haste among Britain’s leadership is adding to the sense of drift in the country, with Prime Minister David Cameron saying he will stand down in the autumn and hand the responsibility for extricating the country from the European Union to his – as yet unknown – successor. But the U.K.is likely to wait before triggering the process.

Despite the temporary relief in currency markets, uncertainty remained over the fall-out from the Brexit vote.

This post was syndicated from The Guardian NigeriaThe Guardian Nigeria.