Fault lines

24 June 2016 By Peter Thal Larsen Follow @Peter_TL

Britain’s referendum decision is an unwelcome blow to an already fragile world economy, but the real change is that it forces companies and investors to reconsider other once-remote risks. A Donald Trump presidency or the break-up of the euro zone may deserve more consideration.

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Financial markets plunged on June 24 as Britain’s decision to leave the European Union sent investors around the world scurrying for safety.

The pound fell by as much as 10 percent against the U.S. dollar, reaching levels last seen in 1985. The U.S. dollar rose by more than 2 percent against a basket of currencies as investors sought out traditional safe havens.

Gold soared as much as 8 percent to its highest level in two years, peaking at $1,358 per ounce. The Japanese yen also strengthened.

The Bank of England offered to provide more than 250 billion pounds ($347 billion) plus “substantial” foreign currency liquidity, Governor Mark Carney said.

The Swiss National Bank said it had intervened in currency markets to weaken the safe-haven franc. Major Asian central banks were also said to be intervening.

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