Forex Weekly Round Up 27/6/16 – 1/7/16

UK financial markets remain volatile in the wake of the Brexit vote, with sterling plunging to a 31-year low against the dollar after Standard & Poor and Fitch downgraded the UK’s credit rating yesterday. S&P downgraded the UK’s rating by two notches, from AAA to AA, with a negative outlook and Fitch also downgraded the UK, from AA+ to AA with a negative outlook.

Governor of the Bank of England, Mark Carney said the BoE could ease monetary stimulus over the summer following the shock result of a Brexit. The Monetary policy committee will make their initial assessment of the situation on July 14th after its next scheduled meeting and thus paving the way for the announcement of an interest rate cut at the August meeting, moving the interest rate lower than the current record low of 0.5%.

Sterling had slowly posted minor gains across the board following the Brexit as investor risk appetite looked to improve, however this was completely reversed following the announcement from Mark Carney.

Day 1 of the EU Economic Summit took place in Brussels on Tuesday. European Union lawmaker’s stated that the UK should exercise article 50 of the Lisbon Treaty as soon as possible. Furthermore, Nigel Farage took the opportunity to speak to its members, saying that he had achieved his ultimate goal and that the referendum’s result was a reaction to Europe’s intention to impose a political union by “stealth” and “deception” and that policy makers are in denial about their failures. In addition, Angela Merkel, in what seems her toughest comment yet, warned the U.K. to have no illusions about life outside the European Union.

Here are the exchange rates taken at 14:40 today. Please note that all conversions are based on interbank rates without any spreads and should be used only as a guide. For live ‘spot’ and ‘forward’ prices please feel free to drop us a line.

GBP/USD 1.3332
GBP/EUR 1.1951
USD/EUR 0.8964