London, June 24 (IANS) The pound dropped 11 per cent to its lowest level in over three decades as the market awoke to the shock that Britain voted narrowly to exit the European Union (EU).
Dramatic falls in the pound peppered market trading early on Friday, wiping out earlier confidence from exit polls that suggested the ‘Remain’ camp would prevail, the Financial Times reported.
The euro, seen to be vulnerable if Britain voted to leave the EU, was also down 3.2 per cent against the dollar, which also rose strongly against emerging market currencies.
A stunning slide in sterling at 3.40 a.m. saw the currency plummet below $1.40, and 20 minutes later it had breached $1.35 to levels last seen in 1985.
An hour later, the pound touched a new low at $1.3224.
Steven Englander, head of G10 FX strategy at Citigroup, said: “This is major news that has hit the market and the market is trying to find the right price for sterling.”
The pound’s gyrations added up to a record 13 per cent cent intraday range for the pound, smashing the 6.5 per cent from October at the height of the 2008 financial crash and the 4.9 per cent range on Black Wednesday in 1992.
Before any results had been declared, the pound had risen above $1.50, a gain of 0.9 per cent in early Asian trading, its highest level of the year.
Market confidence had been driven by global market research firm YouGov poll released after voting closed at 10 p.m. on Thursday indicating Remain was on course for victory.
But by midnight, traders began giving up their bullish support for the currency, pegging it back to below $1.48.
That wobble turned to outright fear as the pound plunged below $1.43 mark in seconds – a drop of 3.4 per cent – as the result from Sunderland was declared, showing a big majority for the Leave camp.
The pound continued to veer around, rising again to $1.4551, as the market waited anxiously for further results.
As Hong Kong opened, the pound slipped below $1.40, down 6 per cent on the Asian session, while it was hammered against the yen, losing 13 per cent of its value at one point.
The pound was also 8 per cent lower against the euro.
The yen, which opened the Tokyo session at 106 against the dollar, surged in early trading to below 100 for the first time since November 2013.
Soon after, it retreated to trade at 102.