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EU referendum: Pound hits lowest level since 1985 | |
(35 minutes later) | |
The value of the pound has fallen dramatically as it emerged that the UK had voted to leave the EU. | |
At one stage it hit $1.3305, a fall of more than 10%, and a low not seen since 1985. | At one stage it hit $1.3305, a fall of more than 10%, and a low not seen since 1985. |
Before the results started to come in, the pound had risen as high as $1.50, as traders bet on a Remain victory. | Before the results started to come in, the pound had risen as high as $1.50, as traders bet on a Remain victory. |
But following early strong Leave votes in north-east England it tumbled to $1.43 and then took another dive after 03:00 BST as Leave maintained its lead. | But following early strong Leave votes in north-east England it tumbled to $1.43 and then took another dive after 03:00 BST as Leave maintained its lead. |
The move in sterling is the biggest one-day fall ever seen and London's main share index, the FTSE 100, is expected to open sharply lower, with indications of a fall of around 7%. | |
A weaker pound buys fewer dollars or other foreign currencies, which makes it more expensive to buy products from abroad. However it should benefit exporters as it makes their goods cheaper. | |
Against the euro, the pound dropped 7% to around €1.2085. | Against the euro, the pound dropped 7% to around €1.2085. |
The euro also fell 3.3% against the dollar, its biggest one-day fall since the currency's inception. | The euro also fell 3.3% against the dollar, its biggest one-day fall since the currency's inception. |
Currency traders say these moves are more extreme than those seen during the financial crisis of 2008. | Currency traders say these moves are more extreme than those seen during the financial crisis of 2008. |
"Never seen anything like it. These are once-in-a-lifetime moves, bigger than Lehmans and Black Wednesday, and we haven't even had the result yet," said Joe Rundle, head of trading at ETX Capital. | "Never seen anything like it. These are once-in-a-lifetime moves, bigger than Lehmans and Black Wednesday, and we haven't even had the result yet," said Joe Rundle, head of trading at ETX Capital. |
"It's worth noting that trading desks are not fully staffed and these are only the initial reactions," he added. | "It's worth noting that trading desks are not fully staffed and these are only the initial reactions," he added. |
"We're waiting for the big money to crank into action over the coming days and even weeks, which will likely exert further downward pressure on sterling." | "We're waiting for the big money to crank into action over the coming days and even weeks, which will likely exert further downward pressure on sterling." |
EU Referendum Results | EU Referendum Results |
EU Referendum live page | EU Referendum live page |
What next for the world's central banks? | |
Around midnight sterling had risen to $1.50 after leading Leave campaigner Nigel Farage said it looked as though Remain had "edged" the vote. | Around midnight sterling had risen to $1.50 after leading Leave campaigner Nigel Farage said it looked as though Remain had "edged" the vote. |
But those gains were short lived as the first results showed surprisingly strong votes to leave the EU. | But those gains were short lived as the first results showed surprisingly strong votes to leave the EU. |
As for shares, the markets are pointing to a 8% slump when the FTSE 100 opens on Friday. | As for shares, the markets are pointing to a 8% slump when the FTSE 100 opens on Friday. |
'Nervous moves' | |
In Tokyo, the Nikkei 225 share index has fallen by more than 8% with the yen up 5% as investors piled into the Japanese currency, which is seen as a safe-haven. | |
The Bank of Japan (BoJ) said it stood ready to supply money to the markets if necessary. | |
"The BoJ, in close co-operation with relevant domestic and foreign authorities, will continue to carefully monitor how the (British referendum) would affect global financial markets," the Bank's governor Haruhiko Kuroda said in a statement. | |
Japan's finance minister Taro Aso said he was ready to respond to movements on the currency market if necessary to prevent "extremely nervous moves". | |
A increase in the value of the Japanese yen hurts the country's exporting companies. | |
In commodities, the price of gold jumped nearly 7% to $1,348.27 an ounce. | In commodities, the price of gold jumped nearly 7% to $1,348.27 an ounce. |
In pictures: UK votes in referendum | In pictures: UK votes in referendum |
Key moments in the referendum campaign | Key moments in the referendum campaign |
EU Referendum: Decision time | EU Referendum: Decision time |
Top four pound moves post World War II | Top four pound moves post World War II |
Source Bank of New York Mellon | Source Bank of New York Mellon |