When the results in the early hours started seeping Pound plummeted in value and fell to a value of just 1.33 against the dollar. This represents a massive fall of up to 10% in a few hours, which the coin to the lagste point has dropped since 1985 against the dollar (Chart 1)

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Photo: Reuters

Since the withdrawal of England from the exchange rate mechanism in 1992 no longer show such a dramatic devaluation pound. This fierce movements were more pronounced than we have ever seen pound for a financial crisis.

plummeted even in value against all other major currencies, including a decrease of 8% against the euro and up 15% against the Japanese yen.

The euro weakened

The euro itself slammed down in front of every other major currencies. Compared with the dollar amounted to fall 4%, which is at its lowest level since March (Chart 2), while investors fled to the safe yen, which popped up at one point below 100 to the dollar, the first time in two e six months

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Photo : Reuters

the currencies of emerging markets were also shaken by the news, which many currencies against the dollar by 3 to 4% relapsed

How voted England. ?

Unlike a series of polls over the past week, indicating that it ‘remain’ camp would have a marginal lead, overcame the ‘leave’ camp by 52%. Overwhelming gains for staying in the EU in London and Scotland were not enough to defeat the vote in the rest of the country, particularly the northern regions voted massively for leaving the EU.



And British economy?

Given the special nature of the results is difficult with any degree of certainty to predict the impact on the UK economy. We expect at least a sharp rise in inflation, could also lower growth and greater financial uncertainty. The Bank of England has already suggested that the UK economy could fall back together recession, possibly even before the end of this year.

We consider it likely that the British central bank interest rate decisions immediately to lower in order to mitigate the potential shrinkage in British investment and growth. The interest rate could even be reduced to 0, probably already in the next few days, or at the meeting of the central bank in July.



Intervention

The British central bank could even decide to intervene in currency markets, in order to protect the value of the pound. It could also watch the bank to more unconventional methods, such as an expansion of the quantitative easing policy.

The political situation has become particularly precarious, now Prime Minister David Cameron this morning announced that zulle step down after six years as leader the Conservative party.

currency outlook

We will adjust significantly downwards our forecasts for the pound. In the short term, much will depend on the reaction of the monetary and financial authorities, central banks first.

This morning did already rumors that the Japanese central bank intervened has to the rise of the yen down to inhibit. The reaction of the British central bank will thereby be crucial. Undoubtedly this morning crisis meetings convened in Frankfurt and Washington. We expect short-term action, when markets do not stabilize soon.



Insufficient priced

We think that markets the negative economic and political consequences for the rest of the EU is not enough are pricing in. Moreover, we are already seeing in other countries rise, the call to also hold such referendums. The uncertainty surrounding the fiscal and economic union will increase and, in our view, further development of monetary union will be very