Pound Slumps to Fresh New Low Against US Dollar

The UK pound has fallen even further against the US dollar, as nerves intensify over the state of the UK economy in the aftermath of ‘Brexit’, sterling began the day’s trading GMT plummeting to nearly $1.28 and has since recovered slightly to $1.29, but still the lowest it has been against the dollar in 31 years. Currently, British Pound is trading at 1.2983 against US Dollar.
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Market confidence has plunged even deeper, as real estate funds decided that they would put a stop to redemptions, leaving investors being barred from cashing in on their assets.It is feared that forced sales will create a fall in commercial property, in the same vein as what happened in the 2008 financial crash.

Major UK asset managers such as Standard Life, quickly followed by M&G and Aviva, all announced a halt on investors pulling their capital out of property funds.

The Bank of England Governor Mark Carney has also declared that capital requirements from banks will be reduced by £5.7 billion, which is believed to have the potential to free up £150 billion of lending.

In a major report, the UK central bank opined: “There is evidence that some risks have begun to crystallise. The current outlook for UK financial stability is challenging.”

Politically, yesterday was also an important day, as the race to become the next Prime Minister replacing the outgoing David Cameron began, with the favourite Theresa May winning the first leadership ballot polling 165 votes from Conservative Party Members of Parliament, ahead of nearest challenger Andrea Leadsome who won 66 votes.

Dr Liam Fox has now been eliminated from the race, having finished last in the first round, while other candidate Stephen Crabb has withdrawn, both have declared their support for May in the next round of voting which will take place tomorrow.

German Manufacturing Orders Unchanged

Official figures have revealed that the volume of orders in the manufacturing sector in Germany, has remained unchanged in May compared to the previous month, this was an improvement compared to what was found in April, where the amount of orders decreased compared to March by 1.9%.

Foreign orders were the main driver of growth in the sector, leaping by 1.4% in May on the previous month, new orders from the euro area were up 4 % on the previous month, while new orders from other countries decreased by 0.3% compared to April 2016, domestic business went in the opposite direction and decreased by 1.9%.

In May 2016 the manufacturers of intermediate goods fell 2.9%, while the manufacturers of capital goods showed an increase of 1.9% on the previous month, in contrast consumer goods found a decrease in new orders of 0.4% was recorded.

So far today the EUR/USD rate has fallen to $1.10, continuing the depreciation against the greenback that begin yesterday afternoon CET, with the ‘Brexit’ fallout damaging the value of the euro. However, EUR/USD is stable on today’s session.

In their daily report, LMAX Exchange said that troubles in the European banking sector haven’t done anything to help the euro’s cause, especially with talk of Monte Paschi needing a bailout .

They also believed that high frequency traders have stepped in on the offer following this latest breakdown in the pound, continuing to track Brexit headlines and risk sentiment.