The referendum night
On 23 June 2016 the United Kingdom voted to leave the European Union. As results came in overnight, GBP/USD collapsed from around 1.50 to roughly 1.32 — the largest one-day move in the pound in decades. The speed of the fall reflected how heavily markets had positioned for a “Remain” result; when the opposite happened, the repricing was violent.
Why the pound fell
Exchange rates are forward-looking, and the vote raised hard-to-quantify questions about the UK’s future trading relationships, investment flows and growth. Greater uncertainty reduces the appeal of holding a currency, especially one — like the pound — that depends on steady foreign capital inflows to fund a current-account deficit. Markets also judged that weaker growth would push the Bank of England toward looser policy, narrowing the rate advantage that supports sterling.
The long aftermath
Brexit was not a single event but years of negotiation, and the pound traded on every twist: cabinet resignations, parliamentary votes, deadline extensions and, eventually, the 2020 trade agreement. GBP/USD spent much of this period in the 1.20s and 1.30s, well below the pre-referendum level around 1.50, with sharp rallies on signs of a deal and slides on threats of “no deal”. The pandemic in 2020 then added its own enormous swings, briefly driving Cable under 1.15 before a strong recovery.
What Brexit teaches about Cable
The episode is a textbook example of two themes that run through this site: first, that GBP/USD reacts to surprises versus expectations, not just events; and second, that the pound is a cyclical, confidence-sensitive currency that tends to fall when uncertainty rises. For the broader set of forces, see what moves GBP/USD and the wider history of the pound against the dollar.