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Pound and shares hit again by Brexit crisis as gilt yields tumble – business live Pound hits new 31-year low, as Brexit fears grip markets – business live
(35 minutes later)
11.35am BST
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Brits should brace for higher inflation, unless the pound gets its breath back and recovers.
31 year low in £/sterling will directly impact on sterling oil price and therefore petrol prices, in coming weeks... Unless it proves a blip
11.27am BST
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Today’s tumble in the pound, and the plunge in UK borrowing costs, indicate that investors expect interest rates to be cut to record lows.
City analyst Louise Cooper says:
The move in sterling cannot be purely viewed as a negative dire message - “loss of faith in UK blah blah”, but also a realisation that interest rates will be cut by the Bank of England. Rate cuts tend to drive currencies lower.
It is particularly dramatic as at the end of last year, Sterling was pricing in a rate increase.
Investors now fully pricing in at least one cut in UK interest rates in coming months. Pencilling in Bank rate of 0.2% by turn of year
11.15am BST
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The pound has hit a two-year low against the euro, at €1.2017.
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Pound hits new 31-year low
BOOM! The pound just hit a new 31-year low against the US dollar, as Brexit fears continue to grip the financial markets.
Sterling slumped over 4 cents to $1.3220, a level last seen in 1985, beating last Friday’s low.
George Osborne’s attempts to calm the markets are not preventing investors from piling out the pound.
Investors are nervous because they have no idea when the UK might formally begin the process of exiting the European Union.
Ken Odeluga, market analyst at City Index, explains:
The Prime Minister has stated that he intends to leave the task of triggering Article 50 to his successor and we don’t expect him to go back on that at the European Council summit this week.
That leaves sterling with no more visible means of support than it had on Friday.
Historic times.....
Sterling drops to new low of $1.3217. Last time this low Jagger/Bowie 'Dancing in the Street' was No.1 #Brexit #1985 pic.twitter.com/Gi3XvXUsJN
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at 11.11am BST
10.58am BST10.58am BST
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RBS and Barclays weren’t the only major companies to be BRIEFLY suspended this morning:RBS and Barclays weren’t the only major companies to be BRIEFLY suspended this morning:
LSE: Barclays, RBS, Taylor Wimpey, Berkeley Group, Legal & General all triggered automatic suspension today. Happens with large movements.LSE: Barclays, RBS, Taylor Wimpey, Berkeley Group, Legal & General all triggered automatic suspension today. Happens with large movements.
10.35am BST10.35am BST
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RBS and Barclays *briefly* suspendedRBS and Barclays *briefly* suspended
Important point. There are reports that trading in shares in Barclays and Royal Bank of Scotland have been suspended due to the market panic.Important point. There are reports that trading in shares in Barclays and Royal Bank of Scotland have been suspended due to the market panic.
That’s not strictly correct. Both shares were temporary suspended, after triggering automatic pauses due to high volatility.That’s not strictly correct. Both shares were temporary suspended, after triggering automatic pauses due to high volatility.
But right now, RBS and Barclays shares are still changing hands -- down 14% and 10% respectively.But right now, RBS and Barclays shares are still changing hands -- down 14% and 10% respectively.
For context - Barclays shares were suspended twice during the day on Friday. Automatically triggered https://t.co/9z7Sp8MKCjFor context - Barclays shares were suspended twice during the day on Friday. Automatically triggered https://t.co/9z7Sp8MKCj
UpdatedUpdated
at 10.36am BSTat 10.36am BST
10.28am BST10.28am BST
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The pound is continuing to lose ground.....The pound is continuing to lose ground.....
Sterling now under $1.33, down 2.8%#BoristabilitySterling now under $1.33, down 2.8%#Boristability
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After two hours of trading, the FTSE 100 index is down 71 points, or 1.1%, at 6067 points.After two hours of trading, the FTSE 100 index is down 71 points, or 1.1%, at 6067 points.
Although that’s a chunky fall, it’s still higher than during the wild selloff on Friday morning.Although that’s a chunky fall, it’s still higher than during the wild selloff on Friday morning.
If trading ended now, it would be a one-week low.If trading ended now, it would be a one-week low.
9.58am BST9.58am BST
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Sterling is weakening.... now down 3.5 cents, or 2.5%, at $1.3331 this morning.Sterling is weakening.... now down 3.5 cents, or 2.5%, at $1.3331 this morning.
9.58am BST9.58am BST
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European banking shares are being pummelled hard by Brexit worries.European banking shares are being pummelled hard by Brexit worries.
The overall European banks index has shed 5.7% this morning, with Royal Bank of Scotland plunging by 15% and Barclays down 10%.The overall European banks index has shed 5.7% this morning, with Royal Bank of Scotland plunging by 15% and Barclays down 10%.
Laura Foll, fund manager at Hendersons Global Investors, told Sky News that:Laura Foll, fund manager at Hendersons Global Investors, told Sky News that:
There are a huge variety of worries, which is why we’re seeing a bit of capitulation in financials.There are a huge variety of worries, which is why we’re seeing a bit of capitulation in financials.
If the economy slows, interest rates will come down, which means further pressure on bank profit margins, she explains. And if the economy enters recession, banks could start to take losses on their loans.If the economy slows, interest rates will come down, which means further pressure on bank profit margins, she explains. And if the economy enters recession, banks could start to take losses on their loans.
9.41am BST9.41am BST
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Signs of angst in the markets...Signs of angst in the markets...
*BARCLAYS HALTED IN LONDON ON VOLATILITY AFTER SHRS FALL 11.5%*BARCLAYS HALTED IN LONDON ON VOLATILITY AFTER SHRS FALL 11.5%
9.37am BST9.37am BST
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The Osborn relief may be fading fast.... the FTSE 100 index is now down 80 points at 6060, its lowest point of the day.The Osborn relief may be fading fast.... the FTSE 100 index is now down 80 points at 6060, its lowest point of the day.
9.36am BST9.36am BST
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UK borrowing costs hit fresh record lowUK borrowing costs hit fresh record low
In another historic development, the interest rate on UK 10-year bonds has fallen to just 1%, for the first time ever.In another historic development, the interest rate on UK 10-year bonds has fallen to just 1%, for the first time ever.
That means that worried investors are piling into ‘safe haven’ government debt, in case the Brexit crisis worsens further.That means that worried investors are piling into ‘safe haven’ government debt, in case the Brexit crisis worsens further.
[The interest rate, or yield, on government bonds fall when prices rise][The interest rate, or yield, on government bonds fall when prices rise]
Cheap borrowing costs are usually a good thing; in this case, though, it’s a sign of how anxious the financial market are.Cheap borrowing costs are usually a good thing; in this case, though, it’s a sign of how anxious the financial market are.
UK 10 year gilt yield drops below 1% for the first time on record. And records go back to 18th century(!) pic.twitter.com/nCgWoH2ba2UK 10 year gilt yield drops below 1% for the first time on record. And records go back to 18th century(!) pic.twitter.com/nCgWoH2ba2
This is SIMPLY EXTRAORDINARY as the UK 10 year yield reaches 1% as prices surge! Cheap borrowing #GBP #BoE https://t.co/IkwQeQGkihThis is SIMPLY EXTRAORDINARY as the UK 10 year yield reaches 1% as prices surge! Cheap borrowing #GBP #BoE https://t.co/IkwQeQGkih
9.32am BST9.32am BST
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My colleague Katie Allen says that the chancellor covered the right ground this morning, by insisting that the UK economy could survive the Brexit storm.My colleague Katie Allen says that the chancellor covered the right ground this morning, by insisting that the UK economy could survive the Brexit storm.
However, the relief may not last for long....However, the relief may not last for long....
In a classic British understatement, the chancellor opined: “It will not be plain sailing in the days ahead.”In a classic British understatement, the chancellor opined: “It will not be plain sailing in the days ahead.”
He also rowed back on the emergency budget he had threatened in the event of a leave vote. Now Osborne is saying the Treasury response to Brexit will not come until the autumn when the fiscal watchdog, the Office for Budget Responsibility, has had a chance to assess the economy and a new prime minister is in place.He also rowed back on the emergency budget he had threatened in the event of a leave vote. Now Osborne is saying the Treasury response to Brexit will not come until the autumn when the fiscal watchdog, the Office for Budget Responsibility, has had a chance to assess the economy and a new prime minister is in place.
In short, Osborne ticked a lot of boxes. So far the pound has steadied and theFTSE 100 is not down as sharply as it might have been. But the UK is facing a political crisis and an unprecedented process of untangling from the EU. The chancellor’s soothing words are unlikely to provide anything but a short-term tonic to nervous households, businesses and investors.In short, Osborne ticked a lot of boxes. So far the pound has steadied and theFTSE 100 is not down as sharply as it might have been. But the UK is facing a political crisis and an unprecedented process of untangling from the EU. The chancellor’s soothing words are unlikely to provide anything but a short-term tonic to nervous households, businesses and investors.
Related: Market turmoil: Osborne said all the right things, but relief will be temporaryRelated: Market turmoil: Osborne said all the right things, but relief will be temporary
9.22am BST9.22am BST
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Here’s our news story about George Osborne’s attempts to reassure the financial world today:Here’s our news story about George Osborne’s attempts to reassure the financial world today:
Related: George Osborne seeks to calm markets amid Brexit turmoilRelated: George Osborne seeks to calm markets amid Brexit turmoil
It begins...It begins...
George Osborne has sought to reassure financial markets by insisting Britain’s economy is in a strong position to adjust to life outside the European Union.George Osborne has sought to reassure financial markets by insisting Britain’s economy is in a strong position to adjust to life outside the European Union.
Breaking his silence in a statement at the Treasury, the chancellor said he “did not resile” from the dire predictions made during the referendum campaign that Brexit could plunge Britain into recession and cost hundreds of thousands of jobs.Breaking his silence in a statement at the Treasury, the chancellor said he “did not resile” from the dire predictions made during the referendum campaign that Brexit could plunge Britain into recession and cost hundreds of thousands of jobs.
“It is inevitable, after Thursday’s vote, that Britain’s economy is going to have to adjust to the new situation we find ourselves in,” he said.“It is inevitable, after Thursday’s vote, that Britain’s economy is going to have to adjust to the new situation we find ourselves in,” he said.
But in a phrase reminiscent of Gordon Brown’s language in the early days of the 2008 crisis, he repeatedly insisted that the “fundamentals” of the British economy were strong.But in a phrase reminiscent of Gordon Brown’s language in the early days of the 2008 crisis, he repeatedly insisted that the “fundamentals” of the British economy were strong.
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