Pound sterling fell to the lowest level since 31 years and amounted to 1.1484 euros. Investors are getting rid of British assets, which are now considered risky, due to the new wave of concerns about Brexit. There are some emerging risks for financial stability of Great Britain, which we warned before referendum on Brexit, – said Bank of England spokesman, announcing steps to ensure that British banks will continue to operate in a normal manner.
“There is evidence that some of the risks begin to crystallize. It’s hard to forecast the financial stability.” Bank of England Financial Policy Commision met twice after the Brexit referendum of 23 June.
On Tuesday for the third time in 12 days, Bank of England Governor Mark Carney reassured the British public opinion, that everything is under control. This only reinforces belief that current situation is very bad for English currency.
The head of the Bank of England told reporters that the institution will change its capital requirements, to potentially release 150 billion pounds in loans to households and companies, in the hope of maintaining the economy at an appropriate (read: pre-Brexit) level.
Bank decided to reduce restrictions on capital requirements for banks at least until June 2017 to encourage them to extend loans, in order to support uncertain future of the British economy. This means that Central Bank is withdrawing its March decision, which increased these requirements.
So should you buy GBP now?
It’s impossible to use any predictable technical analysis right now and everything is directed by fundamentals – Central Bank actions and political decisions. No one even has idea how to proceed with this “Brexit”, Cameron stepped out and will be probably replaced by Theresa May. Main Brexiters – Nigel Farage and Boris Johnson fled and don’t want to take responsibility and participate in this mess, which damaged British economy. As I correctly predicted (and profited from) both Brexit and rapid appreciation of CHF, I would however suggest to buy GPB to EUR now, because Britain Central Bank is dumping billions of Pounds, which would strengthen currency. GBP price will retract to its previous price, just like FTSE index has already returned to pre-Brexit value. If your broker gives you access to less currency pairs you can also buy GBP to exotics, like faltering Polish PLN or Turkish TRY. London will lose some credibility, but it will still remain powerful financial center, firmer then emerging markets, and you can profit very well from GBP rebound, which will last in next few weeks to months.