Article / 24 June 2016 at 4:32 GMT

Divided Britain delivers damning EU verdict

Former managing editor, / Saxo Bank
  • Leave campaign on course for victory with 51.8% to 48.2% lead
  • Scotland comes out overwhelmingly in favour of 'Stay'
  • BBC, ITV, Sky all call it in favour of Brexit
  • Vote sends GBPUSD from 1.50 after polls shut to below 1.35
  • Sterling at lowest level since 1985
  • USDJPY closes in on parity
  • David Cameron's position as Prime minister under fierce scrutiny


He gambled, and it seems he lost. Photo: iStock

By Martin O'Rourke

The vote may not yet be fully counted but the 'Brexit' camp are already getting ready to celebrate with the BBC, ITV and Sky all calling it in favour of the UK leaving the European Union.

From the moment Sunderland returned with a 61% vote in favour of 'Leave', markets, which had initially priced in a 'Bremain' win, have sprinted towards safe-haven assets with gold, bonds and the Japanese yen all surging.

Sterling has been pounded after an opening surge to 1.50 in Asia gave way to a precipitous plunge that outstripped the fall at the time of the global financial crisis in 2008 and the UK's exit from the exchange rate mechanism in 1992.

Sterling was at 1.3234 at 0429 GMT for 31-year lows putting the Bank of England on high alert:

"Volatilities traded small offered into the polling station close, but with the first surprises with results in favour of Brexit, vols traded sharply higher again", says Dan Juhl Larsen from the FX Options desk. "When the result seemed clear we saw vols coming small off again, but after GBPUSD spot broke below 1.3500 it all turned bid again".

Sterling's slide dwarves the respective falls in 2008 and 1992

Source: SaxoTraderGO

Gold broke through the £1,000/oz mark at approximately 0400 GMT, XAUEUR hit $1,217/oz and XAUUSD hit an intra-session high of around $1,350/oz before slipping back slightly to $1,331/oz.

Gold was at $1,267/oz at 0655 GMT Thursday morning.

USDJPY meanwhile broke through the 100 barrier to hit 99.864 before settling back just a little above the 101.0 handle. Government bonds are also going through the roof with US 10-year treasures up 2.5 figures and two-year US yields collapsing 0.25% to 0.54.

EURUSD slipped below 1.09 before coming up for air again above the 1.10 handle.

Calls for David Cameron to consider his position have already been made while UKIP leader Nigel Farage has declared that June 23 would "go down in history as our independence day".

A snap-analysis of the results in show Scotland has voted overwhelmingly in favour of Britain staying by approximately a 2-to-1 majority putting Edinburgh potentially at loggerheads with much of the rest of the country. Wales is set to reject European membership.

The results also show a sharp divide between urban centres and rural England with the countryside coming out largely against membership and the majority of the big urban centres in favour of a 'Stay' result.

It also feeds into the narrative that has pitted the 'haves' against the 'have nots' ever since the global financial crisis of 2008 and has afforded an angry electorate the chance to deliver a knock-out blow that spells curtains for Cameron's tenure and brings into doubt the whole European project.

The UK has made its decision and markets are reeling. Photo: iStock

Martin O'Rourke is managing editor at Saxo Bank


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