CUR­RENCY WATCH

Living France - - Les Pratiques -

For­eign ex­change mar­kets ex­pe­ri­enced vo­latil­ity as ex­change rates re­acted to the un­cer­tainty in the run-up to the EU ref­er­en­dum, and once it be­came clear that the UK had voted to leave the EU, the value of the pound dropped sig­nif­i­cantly.

Ster­ling fell to a 30-year low against the US dol­lar and the GBP/EUR ex­change rate fell from a pre­vi­ous high of 1.31 to a low of 1.17, but has since sta­b­lised at around 1.21. Some ex­perts had pre­dicted that the pound to euro ex­change rate could reach par­ity if the UK voted in favour of Brexit, but the drops seen have not been as se­vere as some an­a­lysts had been ex­pect­ing.

“While the sit­u­a­tion may be chaotic in the short-term, over the course of the Brexit ne­go­ti­a­tions, the in­tial panic will sub­side and fi­nan­cial mar­kets are likely to sta­bilise,” com­ments Laura Par­sons of TorFX. “Although some an­a­lysts have pro­jected that the pound could fall to par­ity against the euro in the weeks and months ahead, both the Bank of Eng­land and Euro­pean Cen­tral Bank have of­fered as­sur­ances that they will step in to sta­b­lise the mar­ket if the sit­u­a­tion war­rants it.”

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