Concerns surrounding Britain's referendum has already flattened Pound, since market opened on Monday. From Friday's closing at 1.44 against Dollar, Pound has fallen sharply against Dollar and now trading at 1.388 against Dollar.
Despite such a move, the concern seem very much local, only impacting local assets and likely to remain that way, according to survey by Oxford Economics.
According to survey to investors where they had to list of their top three global concerns -
- 90% of the respondents cited China as top three global concern
- 56% cited oil as top three.
- 47% are worried over economics in Euro Zone.
- 46% are worried over increased geo-political risks.
- 39% cited concerns surrounding US rate hike.
- 25% are worried over implications of currency wars.
- Only 18% of the respondents cited Brexit among top three concerns.
This is not unusual given the relatively smaller, $2.9 trillion UK economy. Pound accounts not much for global concerns. Even the credit market is relatively smaller.
Nevertheless, it poses significant risks to UK economy just from Pound. If Pound drops by 20% as suggested by Goldman Sachs, inflation could ramp up, and Bank of England (BOE) may see its hands tied with economic slowdown.
