Aftermath from Brexit Continues with Sterling Down Nearly 4 percent

Worries over the aftermath of Britain’s decision to quit the European Union continued to influence the financial markets on Monday. Stocks continued to slide as investors reacted to another drop in the British Pound. Gold and other safe haven markets benefited from another round of fear-induced buying.

The GBP/USD hit 1.3151, its lowest level in 31 years. Based on the price action and the aggressive selling, some traders and analysts are predicting the slide will continue. Today’s low marked an 11.5 percent decline from the British Pound’s closing level on June 23.

The Forex pair was down 3.6 percent at 1.3189, despite efforts by British Finance Minister George Osborne to assure the UK citizens that the economy was in good shape and that the government and Bank of England could implement further actions if needed.

The fallout from the referendum and how it would affect the European economy also pressured the Euro which remained weak. The EUR/USD was last down about 0.80 percent at 1.1008. This is up slightly from its session low at 1.0970.

Safe-haven buying helped drive the Japanese Yen higher, though expectations that the Bank of Japan could intervene to halt the currency’s rise limited its advance. The USD/JPY was last trading at 101.673, down 0.470 or -0.46%. The EUR/JPY was down 1.540 at 111.926.

Overnight, Japanese Prime Minister Shinzo Abe said at an emergency meeting between the government and the Bank of Japan that he has instructed Finance Minister Taro Aso to watch currency markets “ever more closely” and take steps if necessary.

August Comex Gold posted a modest gain on Monday, hovering near its more than two-year high reached on Friday as uncertainty over Britain’s vote to leave the European Union encouraged investors to sell equities and seek safer assets.

Holdings in SPDR Gold Trust GLD, the world’s largest gold-backed exchange-traded fund, jumped 2 percent to 934.31 tonnes on Friday, the highest since July 2013.

China’s gold imports via the main conduit Hong Kong rose nearly 68 percent in May to the highest since December, data showed on Monday.

The stronger U.S. Dollar helped drive August Crude Oil prices about 3 percent lower on Monday. Also helping to weaken the market are concerns over lower demand from Europe. Britain’s demand for fuel, on the other hand, is regarded as negligible at the global level.

Internationally traded Brent and U.S. West Texas Intermediate Crude Oil futures have lost about 7 percent since last Thursday’s settlement.

U.S. stocks were mostly lower on Monday, extending Friday’s steep decline. The Dow Jones Industrial Average briefly fell more than 300 points in mid-morning trade. The S&P 500 came off lows and struggled to hold the psychologically key 2,000 level. Investors remained relatively defensive, with utilities and telecoms the only advancing S&P sectors.