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Daily Market Review – 27/06/16

Investors getting into their offices this morning and traders turning on their terminals all know that Friday produced a wild day of trading. Risk aversion became the theme when it became clear that the U.K. had decided to vote itself out of the European Union via the Brexit. The GBP The GBP The GBP is the official currency of the United Kingdom. The GBP is a major currency and currently ra... More is the official currency of the United Kingdom. The GBP is a major currency and currently ra... More went tumbling down, along with the EUR The EUR The EUR is the official currency of the European Union. Presently 19 out of the 28 collective  nati... More is the official currency of the European Union. Presently 19 out of the 28 collective  nati... More , and stocks and Indices were punished with declines too. Safe havens were sought and because of this gold found many takers and the USD The USD The USD is the official currency of the United States of America. It is the largest reserve currency... More is the official currency of the United States of America. It is the largest reserve currency... More got stronger.

While the vote has been counted and its result is known, now the ramifications from the outcome will have to be worked out. Hysteria has been seen from a lot of politicians and hyperbole have been a centrepiece of their comments. However, the markets will return to normality at some point. Investors love clarity and there is a lack of it currently, but if politicians are smart they will start to come in from the edge and start to act responsibly with pragmatic actions.

Mario Draghi will speak later today and he will certainly have to discuss the Brexit and its potential impact and disruptions, but it is also likely that he will take a cautious approach with his remarks. The EUR like the GBP stands at a dangerous juncture, both currencies will be tested in the weeks to come and their stability and value will be affected by the way leaders of ECB The European Central Bank The European Central Bank, ECB The European Central Bank, ECB, is the Central Bank of the European Union and sets the monetary poli... More , is the Central Bank of the European Union and sets the monetary poli... More , ECB, is the Central Bank of the European Union and sets the monetary poli... More and BoE work and interact.

There will be a lack of important data today, but even if important economic statistics were to be published, the focal point would be market sentiment and how it gets translated into tradable actions. Undervalued assets Can be stocks, commodities, indexes or Forex currency pairs. More abound because of the sell off on stocks, Indices, commodities and FX, but the next few days will have to be watched carefully for a continuation of selling if large investors continue to reorganize their portfolios as they look for safe short-term avenues to put their money.

Traders need to be aware that the Non-Farm Employment Change numbers do not come from the States this Friday because of the Independence Day holiday weekend in the U.S, but it is a certainty that investment houses will keep plenty of staff around – including this coming Friday to deal with any volatility that could ensue globally if knock on affects continue because of the Brexit.

The GBP and EUR may both be oversold at this juncture, but short-term traders need to carefully interpret ranges and know that they might not get reversals that they hope for per their usual technical The use of the term technical The use of the term technical The use of the term technical in trading usually refers to a variety of methods in which a trader or... More in trading usually refers to a variety of methods in which a trader or... More in trading usually refers to a variety of methods in which a trader or... More tools. Indices also could provide additional fireworks for those who have the stomach to test the markets, but traders need to understand that rapid swings could dominate the day.

GBP/USD chart this morning approximately 7:15 GMT, 27 June 2016

GBP/USD chart this morning approximately 7:15 GMT, 27 June 2016