Bank of England move points to more independent bank regulatory approach as sterling remains under post Brexit pressure
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6th July 2016, 07.50 hrs GMT: Sterling slump continued overnight, breaching $1.30 for the first time in over 30 years touching a new low of $1.2835
The overnight lows saw sterling 13.7 per cent down on its immediate pre Brexit level against the dollar. Sterling was down by 11.09% against the euro. The euro's Post Brexit overnight low against the USD was 3.03% lower..

The overnight fall is despite an announcement from the Bank of England yesterday that it will lower capital requirements for UK banks (a reversal of its decision to increase its Counter Cyclical Capital Buffer in March 2017). This, along with some other technical changes, were said by the bank to allow regulated banks to release GBP 5.7 billion of counter-cyclical capital buffers that they are to hold. The Bank of England announced the cut in capital requirements after warning that the risks posed by Brexit were already beginning to crystallise and the outlook for financial stability was “challenging,”

The BoE, announcing a reversal of its decision to increase the Counter Cyclical Capital Buffer in March 2017, whilst also announcing some technical changes that would ease banks’ capital requirements by GBP5.7bn.

Finance Dublin comment:

These changes are outlined in the Bank's Financial Stability report, available on the bank's website. This move is a significant one, and underlines the potential future of a more independent UK central bank in global financial markets. Post financial crisis, banks globally have tightened their prudential requirements for banks, and this may be seen as a potential move by the Bank of England in the direction of a more independent bank regulatory policy.

It is an important input for banks researching their EU and eurozone single market passporting continuency plans post-Brexit.

Bank of England Financial Stability Report, July 2016

The table below shows the overnight sterling lows, in context, since the pre Brexit vote level for each currency:

MAIN CURRENCY MOVEMENTS, POST BREXIT:

The overnight lows saw sterling 13.7 per cent down on its immediate pre Brexit level against the dollar. Sterling was down by 11.09% against the euro. The euro's Post Brexit overnight low against the USD was 3.03%.

GBP/USD
POST BREXIT LOW (03.05 HRS GMT, 06-07.2016): $1.2835
% FALL SINCE BREXIT: 13.73%

GBP/EUR
POST BREXIT LOW (03.05 HRS GMT, 06-07.2016): 1.1622
% FALL SINCE BREXIT: 11.09%

EUR/USD
POST BREXIT LOW (03.05 HRS GMT, 06-07.2016): 1.1039
% FALL SINCE BREXIT: 3.04%