With results still coming through, it’s looking more likely that the UK will leave the EU, but it ain’t over until it’s over. We’ve seen near unprecedented volatility, not only on sterling, but also in many other asset classes besides. If this does prove to be the case, then the next stage will be worrying about possible FX intervention, less so from the UK, but more so from the Bank of Japan and/or the SNB. There will be a balance to be had. In essence, the UK government will downplay the near-term economic impact, given that in essence nothing will change for some time. That said, the uncertainty created will weigh on households and businesses. There are also the ramifications for Europe itself and the European project. It’s certainly damaged, whatever the final result.
We’ve seen USDJPY dip below the 100 level, but the BoJ will be reluctant to act unilaterally; it will want its G7 partners on board, but they may not be overly keen at this point. It’s going to be a tense few days, whichever way it falls.