Sterling gains after Brexit shock

Trading on Asian markets calmed overnight

Sterling gains after Brexit shock

Chris Radburn / PA

The pound has made back some ground while stock markets are calmer following two days of turmoil since the UK's Brexit vote.

After slumping to a fresh 31-year low against the dollar on Monday, sterling was just under a cent up on the greenback in Asia trading on Tuesday at $1.33.

While Hong Kong's Hang Seng slipped 0.9%, Japan's Nikkei 225 was 0.6% higher in late trading and futures markets pointed to stronger openings in London and New York later in the day.

The FTSE 100 was forecast to open 1.2% up after a 2.6% fall in the previous session. The declines witnessed on both Friday and Monday meant almost £100bn has been wiped from its market value since the referendum result was known.

Banks, house-builders and airline stocks have felt most of the pain. The FTSE 250, which is a better indicator of the health of UK businesses than the more global FTSE 100, has lost 14% of its value in the same period.

Trading on markets in Asia was reported to be light following the intense activity witnessed on Friday and Monday.

Commenting on the situation Yutaka Miura, senior technical analyst at Mizuho Securities, said "Short-covering in the currency market and US futures market is limiting selling.

"But overall sentiment remains fragile," he added.

The referendum result, being largely unexpected by markets, has massively contributed to the jitters that were already evident about the state of the world economy.

Uncertainty over the potential impact on Britain and the EU from a Brexit - along with the resulting political crisis in the UK - has sparked warnings that companies and even governments will delay investment.

Ratings agency Standard and Poor's stripped the UK of its top AAA credit rating on Monday evening, arguing that the vote "will lead to a less predictable, stable, and effective policy framework in the UK".

IRN