If there is one prey that fell helplessly in the hands of the controversial Brexit vote, it is the British pound.
London’s chip currency has dived dramatically and has lose its value against its major counterpart due to the prevailing anxiety swirling in the global financial market as an aftermath of the shocking referendum.
Anyone can say that the sterling has been wounded but one cannot simply imagine to what extent was the damage.
The most remarkable impact of the Brexit vote in the market is, no doubt, the exchange rate. The decision is considerably a painful punishment to the British pound, which was enjoying a relatively calm first half of the 2016, months before the June 23 ballot.
The Brexit vote was unexpected, a shocker that sent a strong volatility in the global economy. Its effect to the currency was also unprecedented. After the UK’s decision to leave the 28-member bloc, the sterling plunged to its lowest level not seen in two decades, giving up 10% of its strength at 1.33 versus the dollar, compare to the 1.50 level before the pre-Brexit poll.
Investors were stunned with the biggest one-day fall of the pound. It was the first time since 1985. Then things got worse for the currency as the crystal ball projects that UK will have weaker growth after the vote, prompting a severe downturn to the British pound.
Plagued by the ongoing political upheaval, it suffered a flash crash in October 7, where the currency tumbled by a huge 6% in just two minutes, adding to the 11% loss four months after the vote. Just four days after, it touched its 31-year low of 1.21 per dollar after slumping 19%. Throughout December, it was down 12% and 15% against the euro and greenback respectively.