Pound extends losses but stocks attempt a rebound

The pound resumed its downward path in Asian trading today following the UK’s referendum last week to leave the EU that led to the British currency plummeting to its lowest since 1985. Sterling was trading 1.7% lower against the dollar at 1.3435 in late Asian session, while the euro was 1.2% firmer at 0.8212 pounds.UK Chancellor of the Exchequer George Osborne spoke for the first time on Monday since Friday’s shock result of the EU vote. Osborne sought to reassure financial markets that the UK economy is strong enough to withstand the volatility brought on by the decision to leave the EU. Osborne said that the government and the Bank of England had “well-thought through contingency plans” but appeared to rule out an emergency budget before a new prime minister is elected.There was further uncertainty in Europe on Monday after Spain’s elections on Sunday failed to break the deadlock from the first elections six months ago, pointing yet again to prolonged coalition talks.The euro was trading around 0.5% lower against the dollar in late Asian trading at 1.1052. It was down a similar amount against the yen at 112.88. The dollar was also weaker against the yen at just above the 102 level. The yen failed to be significantly impacted from reports today that Japan’s prime minister has instructed his Finance Minister Taro Aso to watch currency markets closely and take steps if necessary.However, the news boosted the Tokyo stock market as the Nikkei 225 index closed up 2.4%, reversing some of Friday’s sharp losses. Shares in China also attempted a rebound with the Shanghai SE Composite index closing up 1.5%.The Chinese currency was not as buoyant though as the yuan weakened to its lowest since late 2010 and was last trading at 6.64 to the dollar.The only data to come out of Asia today were trade figures for New Zealand, which came in better than expected. However, the New Zealand dollar was unable to get a lift from the data and headed lower in Asian trading together with other risk currencies which continued to feel the impact of last week’s Brexit vote. The kiwi was last trading at 0.7071 versus the greenback while the Australian dollar was at 0.7428.Oil prices remained depressed as the added uncertainty from the UK vote has dampened the outlook for global growth. US oil futures were trading near Friday’s close at around $47.80 per barrel.The rest of the day is looking extremely quiet in terms of data with US trade numbers and services PMI being the only data to attract attention.

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