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PM David Cameron Resigns, EU Referendum Brexit Inspires ‘Bregret’ – Pound (GBP) Exchange Rates Fall

David Cameron resigns following UK Brexit

  • UK Votes to Brexit in EU Referendum – PM David Cameron Resigns
  • Pound (GBP) Exchange Rates Plummet – GBP/EUR Falls from 1.31 to 1.20
  • Further Volatility Forecast – How are financial markets coping with the news?

On Friday Pound (GBP) exchange rates plummeted across the board as those investors who managed to sleep overnight woke to the news that the UK voted to Brexit in the EU referendum, prompting the resignation of Prime Minister David Cameron.

The Pound Euro and Pound US Dollar exchange rates both recorded significant declines before levelling out -3.3% and -5.7% lower respectively. Further Sterling losses are expected as plans to leave the EU develop, although it’s now being reported that a significant number of ‘Leave’ voters are now feeling ‘Bregret’ over their decision.

Some have been reported as saying that they felt lied to by ‘Leave’ campaigners and assert that they would vote ‘Remain’ if they had the chance to do so again.

According to The Independent: ‘Electoral services workers have reported calls from people asking if they could change their decision after Friday’s result became clear, while some publicly admitted they intended to use a “protest vote” in the belief the UK was certain to remain in the European Union.’

A petition to hold a second referendum has also been circulated, gathering around 3 million signatures by Sunday morning.

Despite these shifts in sentiment, the UK is still on course to leave the EU. What does this historic development mean for both financial markets and the UK as a whole?

UK Votes for Brexit, Pound (GBP) Euro Exchange Rate Falls to 1.20, Pound US Dollar Slumps to 1985 Low

Despite the latest polls indicating that the ‘Remain’ campaign would carry the day, the UK voted to Brexit from the European Union on June 24 2016.

The historic event triggered immediate, dramatic movement in financial markets and a bold political move as PM David Cameron resigned.

While the Pound Euro (GBP/EUR) exchange rate had previously rallied to 1.31 on the back of rising hopes of a ‘Remain’ vote, the pairing swiftly crashed to 1.20 when the Brexit win was revealed.

Similarly, the Pound US Dollar (GBP/USD) exchange rate crashed from 1.50 to 1.34 – the lowest levels seen since 1985.

The Pound also fell against the Australian Dollar, New Zealand Dollar and Australian Dollar while stocks tumbled.

The development has also provided the catalyst for an increase in Eurosceptic attitudes across Europe, with other nations now calling for their own referendum.

Vote to Brexit Sees Prime Minister David Cameron Resign

With PM David Cameron being a fierce proponent of the ‘Remain’ campaign, his decision to resign on the ‘Leave’ result was expected by many, despite a large proportion of MPs urging Cameron to stay in his post in order to limit volatility.

Cameron’s statement was as follows:

‘Good morning everyone, the country has just taken part in a giant democratic exercise, perhaps the biggest in our history.

Over 33 million people from England, Scotland, Wales, Northern Ireland and Gibraltar have all had their say.

We should be proud of the fact that in these islands we trust the people for these big decisions.

We not only have a parliamentary democracy, but on questions about the arrangements for how we’ve governed there are times when it is right to ask the people themselves and that is what we have done.

The British people have voted to leave the European Union and their will must be respected.

I want to thank everyone who took part in the campaign on my side of the argument, including all those who put aside party differences to speak in what they believe was the national interest and let me congratulate all those who took part in the Leave campaign for the spirited and passionate case that they made.

The will of the British people is an instruction that must be delivered.

It was not a decision that was taken lightly, not least because so many things were said by so many different organisations about the significance of this decision.

So there can be no doubt about the result.

Across the world people have been watching the choice that Britain has made.

I would reassure those markets and investors that Britain’s economy is fundamentally strong and I would also reassure Britons living in European countries and European citizens living here there will be no immediate changes in your circumstances.’

While Cameron’s resignation is likely to inspire further uncertainty during an already tumultuous time, the fact that Article 50 (which would result in the UK’s immediate leaving of the EU) won’t be enacted reassured markets to a certain extent and the Pound Euro exchange rate trimmed its daily decline to -3.7%, taking GBP/EUR to 1.23.

The Pound Sterling to US Dollar (GBP/USD) exchange rate remained -5.3% down, trading in the region of 1.38.

Motion of No Confidence Issued Against Jeremy Corbyn

There was more political turmoil as a motion of no confidence was submitted against Labour leader Jeremy Corbyn.

According to the BBC:

‘The leader’s critics said he was half-hearted in calling for Labour voters to unite behind Remain. Dame Margaret said Mr Corbyn should resign because the EU referendum had been a “test of leadership” that he had “failed”. This left Labour voters “not getting a clear message”, she added.Dame Margaret is the MP for Barking and the former chairwoman of the Commons Public Accounts Committee, while Ms Coffey is the MP for Stockport.’

Expert Responses to the EU Referendum Result & Pound (GBP) Exchange Rate Movement

Katie Allen, reporting for The Guardian, stated: ‘Shares plunged and the pound plummeted to a 31-year low as panicked traders reacted to the UK’s vote to leave the EU and the prospect of recession amid months of market turmoil.

The FTSE 100 tumbled 530 points, or 8.4%, within the first few minutes of trading. That mirrored sharp losses for the pound overnight as investors sold sterling on the back of growing worries about the UK’s economic outlook.

Live Global markets plunge after UK votes to leave EU.’

In the view of Foreign Exchange Strategist Lee Hardman: ‘Clearly it’s a huge shock which is having global ramifications across all asset classes. This is still the early stage and it could obviously continue to morph into something even more extreme. That will be the primary concern.’

Meanwhile, Joe Rundle of ETX Capital noted: ‘Leave’s victory has delivered one of the biggest market shocks of all time. The Pound has collapsed to its lowest level in over 30 years, suffering its biggest one-day fall in living memory. Panic may not be too strong a word – the pound could have further to go over the next couple of days as markets digest the news. It’s fair to say we’ve never seen anything like it and the chances are markets will remain highly volatile over the coming hours and days.’

And HSBC’s David Bloom summed it up pretty well when he commented: ‘There are certain days you never forget and this will be one of them. Everyone is all over the place, it’s been a roller coaster.’

Chris Beauchamp of IG Group was slightly more optimistic when he noted: ‘It’s certainly been one of the most unusual days in recent history. I’d say the markets have held up reasonably well but whether that continues into the next week remains to be seen – it depends on what we hear over the weekend from politicians and central banks.’

How will the Foreign Exchange Market and Pound (GBP) Exchange Rates React to the UK’s Brexit?

We’ve already seen considerable market movement today and the volatility is unlikely to die down in the near future.

But how are Pound Euro (GBP/EUR) and Pound US Dollar (GBP/USD) exchange rates likely to perform long-term in light of the UK’s move to Brexit from the EU?

TorFX currency analyst Josh Ferry Woodard made this prediction before the vote:

‘The Pound could fall towards 1.20 in the immediate aftermath of the referendum if Britons vote to leave the bloc, and analysts warn that GBP/EUR could slide to parity by the end of the year following a potential ‘Brexit’.

In the longer term, ‘Brexit’ would likely put pressure on the single currency if it fanned the flames of discontent on the continent and boosted support for splinter groups in other nations, such as Germany, Greece, Holland, Italy, Spain and Portugal. ‘Brexit’ could potentially throw the Euro back into an existential crisis, unleashing an awesome wave of uncertainty that could easily cause the Euro to crash land over the next year or so.

The repercussions for GBP/USD following the vote are extreme: if Britain elects to leave the EU then the Pound is expected to devalue towards 1.35 and potentially a 30-year low of 1.30.’

However, with the Bank of England (BoE) pledging to take action if required, the Pound may be prevented from falling too far.


We’ll be reporting on all the latest news relating to David Cameron’s resignation, the UK’s decision to Brexit and the impact on Pound (GBP) exchange rates in the days ahead so stay tuned for more information.