Pound collapses to lowest since 1985 on Brexit shock: Bloomberg

June 24, 2016
Pro-Leave campaigners watch TV screens as results begin to come in at the Manchester Central Convention Complex where the EU referendum vote count is taking place

, TOKYO – The pound collapsed to its lowest level since 1985 as the unit takes a beating on fears that Britain will vote to leave the European Union, in what critics warned would be a hammer blow to financial markets.

The unit tumbled to $1.3466, its weakest level in three decades, according to Bloomberg data, as results in the EU membership referendum showed the “Leave” camp posting big wins and bookmakers making the exit camp favourites.

Investors took fright at the initial results, sending them rushing for lower-risk investments, with the dollar tumbling to just above 103 yen from around 106.80 yen.

The pound later edged back up to $1.4545 and the greenback recovered slightly to 105 yen, but analysts said there would likely be more volatility through the day.

“After the early confidence, we could be getting a dose of realism that’s causing some reasonably skittish market movements,” Jeremy Stretch, head of foreign exchange strategy at Canadian Imperial Bank of Commerce in London, told Bloomberg News.

“It does look like the margin between the two sides is going to be relatively tight, and accordingly sterling volatility is going to remain elevated until we get a more definitive picture.”

Stocks in Tokyo rose almost one percent soon after opening but pared their gains as the morning wore on, sitting 0.2 percent higher, while Sydney turned negative to fall 0.3 percent. Seoul was up 0.3 percent, having swung to and fro. Wellington was 0.4 percent higher.

Highlighting the sense that the race will be tighter than thought, leading British bookmaker Betfair slashed the odds on a win for the “Remain” to 66 percent from 90 percent.

– Key figures around 0030 GMT –

Pound/dollar: UP at $1.4974 from $1.4974 late Wednesday

Euro/dollar: DOWN at $1.1324 from $1.1422

Dollar/yen: UP at 105.17 yen from 106.53 yen

Tokyo – Nikkei 225: UP 0.4 percent at 16,306.64

Shanghai – Composite: Yet to open

Hong Kong – Hang Seng: Yet to open

New York – DOW: UP 1.3 percent at 18,011.07 (close)

London – FTSE 100: UP 1.2 percent at 6,338.10 (close)

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