Global markets are braced for further volatility this week, but the direct impact on Australia of Britain's decision to exit the European Union should not go too far beyond the hit to investor sentiment for now, say economists.
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They say that, with relatively light export flows to Britain and the European Union, Australia's main concern at the moment is the hit to corporate, consumer and investor confidence as the world digests the ramifications of Brexit.
"The main thing that has been delivered in this political event is uncertainty, and it's not at all clear what it's going to mean overall, and certainly not what it's going to mean to Australia," said HSBC's chief economist for Australia, Paul Bloxham.
"Britain is a fairly small trading partner, as is the European Union," he said.
"So I think the direct transmission to the macro-economy for Australia looks limited."
His comments came after bets on an interest rate cut at the Reserve Bank of Australia's July board meeting next week spiked as investors on Friday dumped shares, moved into highly-rated bonds and bought other safe-haven assets such as gold and the Japanese yen.
However, despite initial panic, equity losses across many markets were trimmed in late trading, and sterling, which at one stage dropped more than 10 per cent against the US dollar, ended the US session off about 7 per cent.
The Australian dollar, too, recovered some ground after a 4.5 per cent fall, and is set to open Monday's Asian trade at around US74.50¢, in line with trading before Brexit-related volatility.
It is buying about 54.7 pence, up 7 per cent since before Brexit became a reality on Friday.
According to Commonwealth Bank's chief currency strategist Richard Grace, the Aussie could continue to climb against the pound, particularly if the Bank of England is forced to cut interest rates.
Some of this would reflect an improvement in the value of Australian exports against the cost of UK imports, known as the "terms of trade".
"The Aussie exchange rate [against the pound] is likely to further appreciate as the Australian economy further improves, as global commodity prices further recover, and Australia's terms of trade improve," he said at the weekend.
Although hurting UK residents looking to travel abroad, the lower pound will be a boon for the thousands of Australians who travel to and work in the UK every year.
Economists are betting that if the RBA is forced to cut the cash rate again it will be because of stubbornly low inflation, which it will be able to gauge in time for the August board meeting.
