Let’s look at what happened.
The FTSE 100 Index posted serious gains during last week. It started the week with losses but continued with sharp gains that resulted in an 8.4% increase and ended the trading week at 6,529.3.
Likewise, the FTSE 250, which contains more UK companies, also posted weekly gains by an impressive 10%.
But regardless of the stock market’s rally, securities issued by banks fell as did yields of bonds issued by the UK government following the likelihood of monetary stimulus.
Demand for gold increased as expected and today the price reached a 2 year high at $1,358 per ounce.
However, the pound continued with its losses against the US dollar.
After Mark Carney’s speech on Thursday it fell 0.9% and a further 0.4% on Friday ending the week at 1.32706….actually the price is even lower today with lows of 1.3150 posted a few minutes ago.
It’s been a week after Brexit – what are the UK economic leaders saying?
Bank of England’s Governor and Chairman of the Monetary Policy Committee, Mark Carney, gave a speech on Thursday during which he discussed the worsening outlook of the local economy following the referendum and the need for stimulus measures.
Additionally, Chancellor George Osborne said that the austerity measures taken during the last years by the government could be eased and that the target for a Trade surplus within four years from now might be discarded. He also floated the idea of tax cuts to encourage businesses to stay in the UK.
Before the vote, Mr. Osborne hinted at spending reductions by as much as £30 billion and also increasing of taxes would be necessary in case that the referendum result would be for UK to exit the EU.
What can we expect next?
Last week was dominated by excessive volatility in the financial markets as everyone is trying to predict what will happen following the UK’s vote to ‘Leave’.
And with a lot of developments yet to be ironed out and announced, uncertainty is likely to remain high.