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Those who voted for the United Kingdom to “Brexit” the European Union are already feeling the effects of their decision — in their wallets. According to the BBC , the British pound plummeted in the wake of the UK’s decision to leave the EU.
“The pound fell dramatically as the referendum outcome emerged. At one stage, it hit $1.3236 , a fall of more than 10% and a low not seen since 1985. By lunchtime, it had partially recovered but was still nearly 8% down on the day.”
As reported by the UK’s Telegraph , the country’s currency sank to its lowest level in over thirty years. That’s interesting in that it suggests that the pound is dropping to levels not seen since the early years of the British entrance into the European Union.
The British pound’s drop in value isn’t too surprising. The global markets have gone crazy in the aftermath of Brexit, and there is real fear this one decision could lead to negative consequences for the worldwide economy. As previously reported by The Inquisitr ‘s Loretta Polaski, the Brexit outcome caused markets to crash throughout Europe.
“Both European and Asian stock markets crashed on opening Friday morning as investors dumped shares, according to the Associated Press . Oil prices crashed and the pound is at its lowest level since 1985 against the U.S. dollar. It was the pound’s greatest single-day drop in history.
Britain’s FTSE 100 dropped eight percent. The German index dropped ten percent. Followed by France that fell seven percent. Tokyo stock markets were also slammed with Nikkei 225 dropping eight percent, its biggest loss since 2008. Asian stock markets expect to finish the day at the lowest in years.”
With that grim news as a backdrop, it’s hardly surprising that the British pound would shave off nearly ten percent of its value in less than a day.
The British pound crashed to its lowest levels in 31 years as U.K. votes for #Brexit https://t.co/WeTfyLq2wE pic.twitter.com/LbaPJRyJTD
— CNN (@CNN) June 24, 2016
The question now is will the pound be able to recover? It’s possible the pound is destined to suffer in the short-term, only to surge in value if Brexit proves to be in the best interest of the British. But what if that’s not what happens? It only took one bad day for France to become wealthier than Great Britain. What happens if the years of legal wrangling create more uncertainty? Or if the United Kingdom gets hit by a massive recession it doesn’t have the means to recover from alone?
It’s entirely possible that the Brexit might ultimately cost the UK both Scotland and Northern Ireland — factors that could also negatively impact the British pound. Unfortunately, we are barely even a day beyond the vote, and so it’s hard to predict whether the pound will only suffer short-term consequences or if we’re looking at the early days of a massive drop in value.
Think about people holding British Pound – dharti fat gayee pic.twitter.com/afbGz6K7cO
— Deepak Singh (@smarket) June 24, 2016
Despite panic over Brexit and the negative impact on the pound, it wasn’t a terrible day for some. In fact, there were a couple of strong winners in the aftermath of the market meltdown over Brexit: the Japanese Yen and Bitcoin.
Reuters reports that the Yen surged following the Brexit vote. Finance Minister Taro Aso commented that, if the Yen did too well, Japan would intervene in the event of an “excessive show of strength.”
“‘I’m extremely concerned about the risk (Brexit) has on the global economy, financial and currency markets,’ Aso told reporters. ‘It is extremely important to ensure growth in the global economy, as well as maintaining currency and financial stability.’”
Meanwhile, Verge writes that Bitcoin jumped in value from $550 to $650 overnight. While still down from a two-year high of $719 earlier in the month, it’s just one more demonstration of how global currency is fluctuating in response to Brexit and any perceived consequences. Also worth noting? “Buy gold” searches rose a whopping 500 percent across Britain after the vote.
Do you think the pound will ultimately recover after the Brexit is finalized in a few years — or are we looking at the beginning of the end for the British pound as a viable currency? Share your thoughts below!
[Photo courtesy of Handolio via Flickr | Cropped and Resized | CC BY-SA 2.0 ]
