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27.06.2016 05:56

Asian session: the pound and euro remain under pressure

The pound remained under pressure on Monday, falling to a 31-year low, reflecting the strong bearish sentiment of investors after the UK decided to withdraw from the European Union. The euro was also under pressure as Brexit clouded the future of the European Union.

The market continues to be in a state of shock after the results of the referendum indicated the willingness of the British to leave the EU. Scotland and London by an overwhelming majority voted in favor of EU membership, but Wales and the rest of the country outside of London voted in favor of Brexit. In connection with the results of the referendum, Prime Minister Cameron said that he was resigning. During the campaign he supported the remain in the EU. The prime minister said that the country needs "fresh leadership." "Britain needs a new prime minister and that he will decide when to begin the withdrawal from the EU, but I'll be on the post three months." - Said Cameron. In addition, the head of the Bank of England Governor Mark Carney said that the central bank is ready to provide additional funds in the amount of 250 billion pounds to support the financial markets after the voting. He also said that in the coming weeks, the regulator will consider the possibility of adopting additional measures of support.

Most economists agree that Brexit will affect the economy of Great Britain, Europe, and possibly other countries. Some of them believe that the short-term damage can be limited, if the authorities in Britain and other countries willmanage the consequences.

At the same time, the Prime Minister of Scotland Nicola Sturgeon did not rule out the possibility of holding a second referendum on independence from the UK. "A referendum on independence is now quite possible", - said Sturgeon. She said that Scotland should start preparing for a new referendum on independence from the UK so the region could be in the European Union.

Impact of Brexit - which also caused a lot of turmoil in world stock, commodity and bond markets - are expected to increase due to the potential negative impact in the European economic and political landscape.

"The focus now is Europe, where Brexit can cause a domino effect among the states that wish to withdraw from the EU. Although it has long been said, the main problem for the foreign exchange market is the European political uncertainty, which may lead to the monetary paralysis, "- said Junichi Ishikawa, FX analyst at IG Securities in Tokyo.

Today, the yen is trading in a narrow range. On Friday, the Japanese yen has risen 6.7% against the US dollar for the first time breaking the mark of 100. The sharp increase in demand for the Japanese currency, which is considered a safe haven, was associated with an increase in fear because of Brexit.

Today, Japanese Prime Minister Shinzo Abe at the emergency meeting of top cabinet members with the management of the Bank of Japan said that it is necessary to take additional measures to overcome the instability of the market.

"The market has a sense of uncertainty and increased risks, important steps to calm the situation are needed.", - Said the prime minister. He stressed the particular importance of the protection of the real sector of the Japanese economy, especially small and medium-sized businesses. In particular, at the meeting of the government has asked the central bank to saturate the market liquidity and credit.

During the discussion, the Japanese Deputy Prime Minister Taro Aso said that the finance ministers and the central banks of the G7 were able to bring down the panic. "In general, the measures gave the result," - he said.

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