The GBP/EUR Exchange Rate Latest: 1.15/1.1337 Possible say Soc Gen

Latest views from the analyst community concerning the British pound and financial markets as we look towards what promises to be another week fraught with volatility.

We will be looking for the pound to trade with a negative tone over coming days, however we would not expect the agressive falls witnessed on Friday. 

Focus will fall on Tuesday's European Council meeting - the first time the UK's outgoing Prime Minister meets his European colleauges.

It would have been beneficial to have a pro-European PM negotiate the UK's future relationship with Europe; the negotiations will require skill and goodwill from European partners.

Surely a pro-European would stand the best chance of formenting this goodwill?

Instead there is a strong chance a Eurosceptic, such as Boris Johnson, will head the government which negotiates our post-Brexit future.

Whatever the case, sterling fell to the lowest level against the US dollar since 1985 on news that the UK had voted to leave the European Union

The GBP/USD dropped to a low of 1.3229 but did manage to stage a recovery back above 1.36.

The pound to euro exchange rate tumbled towards 1.20 before rebounding back above 1.22 where it appears to be forming a base.

Here are the latest views in response to the Brexit result and subsequent changes to the UK's political and economic landscape:

Kit Juckes at Societe Generale:

"Brexit is a not a ‘Lehman moment' that will trigger an unforeseen chain of events. Policymakers and companies have had time to make contingency plans, even if they can't fully offset the impact.

"A period of uncertainly starts with the need to choose a new leader of the Conservative Party, then goes on to a drawn-out process of untangling the UK from the EU. Uncertainty is bad for UK growth and won't help Europe either. That wouldn't matter if the global economy were ticking along nicely but it isn't. We expect the pound to fall another 10% over time, and the euro may fall by about half that much."

On the EUR/GBP exchange rate Juckes warns the euro is turning notably bullish.

"EUR/GBP has pierced through the 8-year down channel resistance at 0.81/0.8150. A definite break above 0.8150 would provide a clear sign of a major recovery taking shape, in which case the pair would head towards the 2013 highs of 0.87/0.8820."

Turning the equation around, EUR/GBP at 0.8150 is 1.2270. 0.87/0.8820 is 1.15/1.1337

Rick Deverell at Credit Suisse, in a research note entitled The End of Globalisation:

"The dollar rally is likely to continue, with cable moving into the 120s, while dollar Yen could settle below 100. The only note of caution is the possibility of central bank intervention – possibly in a coordinated fashion."

Commerzbank Chief economist, Dr Jörg Krämer:

"The UK has voted to leave the EU. Markets already reacted strongly today, but not panicky.

"They could recover again in the medium term, as in our view an amicable divorce with a continued British membership in the single market is the more likely scenario. We also show that the negative impact on the UK real economy will be smaller than in past crises."

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Holger Sandte at Nordea Bank:

“The Markets are stabilising a bit with the final outcome now pretty clear. There is little room for further downside, if any at all, as we at least have some clarity – and the volatility should be capped therefore, the GBP should reverse with equities.”

John Cairns at RMB Global Markets:

“What now? Possibly nothing. Having decided to leave the EU, the UK now needs to negotiate its exit.

“This might well take the rest of the decade or more and nothing legally changes in the interim. The best case scenario then is that everyone keeps calm and carries on, and markets quickly stabilise and recover most of their lost ground.”

Alex Edwards, head of the dealing desk at UKForex:

“Overnight, UKForex has a seen a 400% increase in customers making currency transfers, as Australian consumers have flocked to buy sterling at an exceptionally cheap rate.

“It’s bad news for Britons looking to convert their money, particularly those looking to transfer large sums for an overseas move or holiday home. A consumer exchanging sterling for $50,000 today would lose almost £4,000 compared to yesterday’s exchange rate.“There’s a sense of bewilderment amongst many of our British customers, but others are holding out, waiting for the dust to settle before making any big decisions with their money.”

“However, this isn’t such bad news for exporters, who could stand to make serious gains from the pound’s performance. Many of them are busily locking in forward contracts at this morning’s rate.”