The reverberations of the UK’s vote to leave the EU may be felt for many years, but even a few weeks have allowed financial markets to take stock.

Economic forecasts now reflect the near-unanimous view that Brexit would have short term economic costs. For 2017, the consensus now expects minimal UK growth, forecasts for the Eurozone have been substantially reduced, but the impact expected elsewhere is modest.

Nevertheless, the fall in government bond yields and future interest rate expectations has extended beyond Europe. The crystallisation of one economic risk has perhaps resensitised investors to others, such as Eurozone implosion and a Chinese hard landing.

Mark Carney has told us to expect a cut to UK interest rates over the summer. Financial markets concur and protecting against interest rate risk is as expensive as it has ever been. Clients should not necessarily rush to increase protection levels, but the latest events emphasise the importance of having a long-term hedging plan in place and being as flexible as possible in implementation.

Equity markets have recovered rapidly from a downward lurch. Two weeks after the vote, global indices in local currency terms were only a little below 2016’s high. All else being equal, lower risk-free returns might support higher equity valuations. Of course, the logical consequence of lower risk-free returns is that all else – future growth prospects in particular – is not equal.

Sterling has been the biggest casualty of the referendum vote and provides a stark example of the tension between short and long-term considerations. Unhedged UK equity investors have done well: a total return of 12% to global indices. Hedged investors face big cash calls to cover currency losses. What to do now? Momentum is a powerful influence in foreign exchanges and might argue for unwinding hedges. There is, however, an alternative long-term case for more hedging – some valuation measures suggest sterling is as cheap against the dollar as it has been for a generation.

Whatever your view, the appropriate reaction is not a reflex rejection of the current currency hedging policy but a review of its long-term rationale. And, even for an event as seismic as Brexit, that advice holds good for all aspects of your investment strategy.