UK stocks and pound plummet after Brexit

Pound and stocks plummet
24 June 2016

Well, there's no avoiding the topic now - the EU Referendum votes have been counted, and the Leave vote won it.

This morning, in the aftermath, the FTSE 100 fell by over 8%, led by a steep drop in banks as Britain voted to leave the EU, raising the threat of a recession.

The FTSE's drop was its biggest one-day fall since the fall of Lehman Brothers in October 2008.

With David Cameron announcing his resignation, the market got even more turbulent, to the point where the UK stopped being the 5th largest economy in the world.

Bank of England governor, Mark Carney, issued a statement: "The people of the United Kingdom have voted to leave the European Union. Inevitably, there will be a period of uncertainty and adjustment following this result."

"There will be no initial change in the way our people can travel, in the way our goods can move or the way our services can be sold."

"And it will take some time for the United Kingdom to establish new relationships with Europe and the rest of the world. Some market and economic volatility can be expected as this process unfolds."

He added: "We are well prepared for this. The Treasury and the Bank of England have engaged in extensive contingency planning and the chancellor and I have been in close contact, including through the night and this morning."

"The Bank will not hesitate to take additional measures as required as those markets adjust and the UK economy moves forward."

Either way, at one stage, the pound fell by more than 10%, which is a low not seen since 1985.

The housebuilding sector was also badly hit, with shares in Bovis Homes down more than 50%.

Against the euro, the pound dropped 7% to about €1.2085. The euro also fell 3.3% against the dollar, its biggest one-day fall since the currency's inception.

So what does that mean for your pound? Well, today, it is weaker, which means your pound buys fewer dollars or other foreign currencies, and that makes it more expensive to buy anything when you're on your holidays this year.

Will this rectify itself in the coming weeks? Well, no-one really knows because the UK hasn't done anything like this in recent history. Before the vote, many financial bodies and experts said it would be bad news for the pound.

It is now a reality. We wait and see.

TOPICS:   Economy

What do you think?

Connect with Facebook, Twitter, or just enter your email to sign in and comment.

Your comment