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Pound plunge continues as Osborne fails to calm markets

Pound plunge continues as Osborne fails to calm markets

Chancellor George Osborne’s attempt to calm markets has failed as sterling and stocks continuing Friday’s declines.

As markets continued to digest the UK’s vote to leave the European Union last Thursday (June 23), sterling dropped below $1.32 by late morning, a 31-year low, having starting the day at $1.346.

The currency was trading as high as $1.50 on Thursday evening before the results of the referendum came in.

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Equities have also suffered this morning, with some banking stocks – including RBS and Barclays – down a further 15 per cent as the FTSE 100 fell 1.6 per cent and the FTSE 250 slumped 4.5 per cent.

As investors continue to flock to safety, 10 year gilt yields have fallen below 1 per cent for the first time in history. The 10-year gilt yield opened at 1.097 per cent but has now fallen to 0.931 per cent.

Mr Osborne attempted to calm markets with a statement before the open which saw him shelve plans for emergency tax rises and government spending cuts – a measure he warned would take place in the event of a Leave vote.

The Chancellor said a Budget would not happen until new economic forecasts from the Office of Budget Responsibility were finalised. He also said the UK economy could withstand the current volatility, but did not rule out it falling into recession as a result of the vote.