Brexit 'a leap into the dark', 'stepping into the unknown' however you want to call it is always cause within financial markets to take less risk, buy less and even sell out to gain more stability.
However when we analyse the figures what really happened on the evening/morning of the 23rd/24th? we see that when the first Yougov exit poll came out it showed a snug but comfortable remain at 52-48. At this stage the pound hiked to an all year high on 1.5$ to the dollar.
This is what was largely predicted in the coming days and bankers were queuing up around the block to cash in on this hike for their own gain, at this stage far more pounds were bought with the assumption that it would indeed surge and the following announcement by EU companies to commence their investment projects would be cause for further increase.
However when sunderland voted to leave heavily and newcastle was luke warm we saw another story, what was believed not possible became possible. Bankers had in their hands excess currency of a nation which would not be predictable but quite the opposite. They sort to sell those pounds as quickly as possible realising the gamble had horribly backfired.
Billions of pounds were lost, but by who? certainly not heavily by the average person but on those hoping to make a quick buck from the system.
When we also analyse the 'real' loss, it is obviously not good, but it is not as large as they say. The pound shot up by some 5 cents on the dollar upon release of that yougov poll then plummeted around 3am. Coined the worst since 1985. But you can't well take this inaccurate peak and fall at its fullest face, we have to consider the real value of the pound, although it has dipped it is not as large as people make out.
But now what? we have to look at what speculators outside the EU are saying about the UK economy. The Indian finance minister has recently said that his government (and we can assume other governments like it) invest on the capability of the REAL market of the UK, which remains open for business and not structurally impacted, and as such we are unlikely to see much significant change from international investors.
If the decision to leave the EU was fundamentally apocalyptic for the UK as remainers are saying, why have they levelled out and are operating fairly stably now just 48 hours after this seismic decision? we can see throughout history in Russia and the EU real negative decisions have a far longer downward spiral which doesn't simply seize one a BOE governor offers to prob up investments by freeing up capital.
Why did the pound really drop?
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