Opinion: Markets got it badly wrong – now the shock waves begin

Market news
Market news

“The result of the UK’s referendum has sparked pandemonium in financial markets as the leave campaign has proved victorious after securing 51.9% of the vote.

With strong rallies in the pound and UK equities over the past week the result was deemed by some to be a foregone conclusion despite the vast majority of polls showing both sides fairly evenly split.

The pound-dollar traded at its highest level of the year last night shortly after 10pm when the voting booths closed whilst the FTSE futures continued their recent face-ripping rally.

“However, in what will with hindsight surely be seen as a classic example of irrational exuberance traders buying near these highs assuming a victory for remain were wrong – and badly at that.

The turmoil that followed represented sheer panic as long positions rushed for the exits seeing the GBPUSD drop over 10% to print its lowest level in 31 years and FTSE futures falling not much less by around 9%.”

David Cheetham is an analyst at XTB.com