Measuring Currency Contagion Risk of Pound Selloff

The transcript discusses the market reactions to Brexit, highlighting the sell-off of the pound and the potential for further declines. It notes the lack of evidence for significant investor outflows from the UK ahead of the vote. The contagion effect on European currencies, particularly less liquid ones, is also discussed. Speculation about the EU's future post-Brexit is addressed, with some officials calling for more flexibility. The potential for policy responses from the Bank of England, ECB, and BOJ is considered, with easing measures likely to be on the table to address economic uncertainties.

What is the expected trend for the UK market according to the transcript?

• A rapid increase in investments is expected.

• The sell-off is likely to continue.

• Stability is anticipated.

• A significant recovery is expected.

Which currencies were initially affected by the Brexit contagion?

• Asian currencies

• African currencies

• European currencies

• North American currencies

What potential effect of Brexit on the EU is discussed in the transcript?

• Strengthening of EU unity

• Centrifugal forces leading to a breakup

• Immediate economic growth

• Increased political stability

What approach are some French officials advocating for in response to Brexit?

• Increased trade barriers

• Immediate EU expansion

• More EU intrusion

• Greater flexibility and less intrusion

What is the anticipated response from major banks like the Bank of England and ECB to Brexit?

• Immediate interest rate hikes

• No change in policy

• Policy loosening and easing

• Tightening of monetary policy