Pound, euro maintain climb in post-Brexit market pause

[NEW YORK] The pound and the euro extended gains Wednesday but remained far below their levels before Britain voted last week to quit the European Union.

Financial markets that had reeled after last Thursday's EU exit vote rebounded for a second straight day as fears about Brexit's impact on the global economy receded.

"The pause in the selling in nearly all risk assets following the UK's historic move to leave the European Union appears to be more of a period of market consolidation rather than any meaningful improvement in underlying conditions," Omer Esiner of Commonwealth Foreign Exchange said.

The US dollar, which had surged earlier in the week as investors sought a haven, broadly eased back.

The euro rose to US$1.1124 around 2100 GMT from US$1.1065 at the same time Tuesday. The pound rose 0.9 per cent against the US dollar to US$1.3455. It gained 0.3 per cent against the euro at 82.67 pence.

Stephen Innes, senior trader at Oanda Asia Pacific, warned: "This relative calm is unnerving, given how fragile investor sentiment is, and the likelihood of renewed (pound) volatility.

"As a result, FX markets should remain a hot spot for the foreseeable future. Liquidity is gradually improving and appears to have weathered the initial Brexit sell-off."

AFP

For more coverage of the EU referendum, visit bt.sg/BrexiT