Tuesday, February 23rd 2016 - 05:52 UTC

Pound suffers the London Mayor Johnson effect as he supports Brexit

The pound hit its lowest level against the dollar in almost seven years on concerns about a possible UK exit from the European Union. At one stage the pound was down as much as 2.4% at $1.4058, its lowest level since March 2009, before later recovering.

At one stage the pound was down as much as 2.4% at $1.4058, its lowest level since March 2009, before later recovering.

The move follows London Mayor Boris Johnson joining the campaign to leave the EU after Prime Minister David Cameron set a June referendum date.

So far this year, fears of a British exit from the EU have already pushed the pound down by more than 4% against the US dollar.

 The move follows London Mayor Boris Johnson joining the campaign to leave the EU after Prime Minister David Cameron set a June referendum date. The steep fall adds to losses made by the pound over recent months.

So far this year, fears of a British exit from the EU - dubbed 'Brexit' - have already pushed the pound down by more than 4% against the US dollar. Analysts said that was likely to continue to direct sentiment until the vote.

“Today's weakness appears to reflect an increased probability of Brexit after political reaction to the new deal on EU membership was more split than the PM would have hoped,” said Sam Hill, senior UK economist at RBC Capital Markets.

If the pound finishes at its lows for the day, it will be the biggest one-day loss since the Bank of England cut interest rates to 0.5% in 2009 and started its economic stimulus program known as quantitative easing.

The pound has already dropped more than 17% against the dollar in the last 18 months, partly due to the outlook for UK interest rates. Whereas the US raised rates last year, Bank of England governor Mark Carney has ruled out such a rise for now.

As a result sterling is seen as less attractive for investors, continuing to fall from the $1.7165 peak seen on 1 July, 2014. A weak pound helps exporters by making British goods cheaper on international markets. It also makes the UK a better value destination for tourists.

However, a weaker pound makes imports more expensive, possibly hurting consumers and businesses that rely on foreign goods.

Against the Euro, the pound is down 1% to €1.2802. Against the yen, the pound has slumped to 160.075 yen, its lowest since late 2013.

14 comments Feed

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1 Britworker (#) Feb 23rd, 2016 - 08:51 am Report abuse
Oh isn't it terrible. When we have 30% inflation I will start to worry.

I will be voting to leave the EU and Scotland can do what the fuck it wants.
2 ElaineB (#) Feb 23rd, 2016 - 10:40 am Report abuse
It is an interesting development. Until Boris threw his hat into the ring I would have predicted a majority to stay in the EU. Boris has a lot of sway with the general public. Now we will see a real debate.
3 ChrisR (#) Feb 23rd, 2016 - 11:07 am Report abuse
The chickens that run the money desks are 'chicken' and lose their heads at anything.

This is not the end of the fall, it will get worse until the result is known and then things will pick up.

Hopefully it will be 'leave' and the pound will get much stronger than it has been the last 5 years or so without the drag of the EU weighing it down.

Does anybody actually know someone who is voting 'remain', I don't.

Camorons disgraceful rant at BoJo yesterday shows how much he is rattled, GOOD.
4 ilsen (#) Feb 23rd, 2016 - 01:07 pm Report abuse
Just political flim-flam. Boris is after the Top Job. Just a clever manoeuvre on his part. He even said 'at this moment' he is for the Out campaign. He is getting ready to fight the Odious Osbourne for PM when 'Our Dave' quits, (sooner, perhaps, rather than later, if he loses, methinks...?)
5 T_Paine (#) Feb 23rd, 2016 - 01:18 pm Report abuse
Cameron trying to sell his terrible negotiations is really quite hilarious.
UK doesn't need to be part of the EU.
It can still be part of a trade block without having the eurocrats ruining it.

Leave while you still can.

When UK leaves the EU will implode.
6 Room101 (#) Feb 23rd, 2016 - 01:59 pm Report abuse

Still be part of a trade block if the EU implodes?
7 Conqueror (#) Feb 23rd, 2016 - 02:53 pm Report abuse
It's just scare mongering. The papers are full of the doom and gloom merchants telling the people about the miseries to come. Of course, they don't KNOW.

Let's look back to the period between 1000 and around 1600 AD. Britain made a “leap in the dark”. It decided that it would have ships sail hundreds, even thousands, of miles around the world to meet natives of other lands, establish friendly relations, build settlements and trade. Mostly done by private people with courage. And it worked!

If you read Cameron's spiel, he has only one idea. Something like the Norway model. How about something to be known, in future, as the British model? Isn't that what “negotiations” are about?

It occurs to me to make a comparison. On the one hand, there is mercosur, a quasi trade actual political organisation. It's falling apart. As is the EU. Then there's the Pacific Alliance that, so far, has stuck to trade. Isn't it doing fine? Does that prove that “the people” don't like it when they can't vote people in and out?
8 T_Paine (#) Feb 23rd, 2016 - 03:03 pm Report abuse
6. The Uber Techno Gov't in Brussels will fail as one by one all the countries will leave.
There will still be lots of trade whenther its called the EURO or Franc.

Although I really worry about Germany's coming depression. That idiotic Merkle has ruined that country.
9 ElaineB (#) Feb 23rd, 2016 - 03:54 pm Report abuse
Polls (and we know they can be wrong) indicated the vote would be overwhelmingly to stay. I think we all know now that it is going to be a close race.

I know people who are divide in opinion. Some strongly believe we should stay and other that we should leave. It will be decided but the middle ground voters.

The mistake to make is to believe that if we leave we will be going back to the 'good old days'. The world has changed and we have to decide on how it will effect the country in the future, not some trip down memory lane.
10 ChrisR (#) Feb 23rd, 2016 - 05:52 pm Report abuse
@ 9 ElaineB
“The mistake to make is to believe that if we leave we will be going back to the 'good old days'.”

I don't remember many good old days around the time we were given the referendum on joining the common market!

I voted to join to get 'the good days' we were promised by the liar Heath, who clearly (in hindsight) had another plan for us.

Interestingly the City believe that they will 'soar' if we leave and look how many of the FTSE 100 companies are reusing to sign Dave's letter. I do realise that just because they don't sign it doesn't mean they want to go, but Dave thought it was going to be a walk over and I cannot see that.

People are always wary of change, they have a four months to get over it.
11 Briton (#) Feb 23rd, 2016 - 08:13 pm Report abuse
Now now people, don't panic,

if it went up, Cameron would say why leave when its so strong,
but when it goes down, its all the leavers fault,

job losses if we go, bla bla bla,
but hang on a mo,

We are at this moment IN,
and the pound goes down slightly , we have lost millions of jobs over the last 50 odd years,

we have become weak, whilst others have got rich,
we have given the EU so much, and got very little if anything in return,

we wont be worse of by leaving,
but we may well be a lot better-off,

they say we need their security,
this I think is the other way around,
they need us, for there security,

they say, EUROPE has kept the peace for 70 years,
if this was true, then scrap NATO,

the truth is, NATO has kept the peace,
lies and more lies by Cameron and his masters in corrupt Euroland.

then again I could be wrong, and Europe is great, and looked after us and cradled us in her arms safely for our own protection,

but I think not.

vote to leave this corrupt gravy train.
12 ElaineB (#) Feb 24th, 2016 - 11:33 am Report abuse
@10 Indeed. I was referring to the tone of the 'out' campaign. It is painting a false picture of the situation before we joined the common market. I don't think there is anything wrong with being part of a trading block as it gives strength in negotiation. The problem is giving away the powers to impose the laws in keeping with our culture. The truth is that the culture and wishes of Europeans crosses a whole gamut.

I want all the facts before I make my mind up but I notice Cameron is pushing for an early referendum while the sway is in his favour of staying in. I can see his point of view but it is too important a decision to be rushed.
13 Briton (#) Feb 24th, 2016 - 01:46 pm Report abuse
Some are very confused,
theirs seems to be 2 Europe's, but what is what,

first is Europe itself,
the out is not and has not or wants to withdraw from EUROPE and its trade , friendship , and all the rest, holidays work investment ,
we like Europe,

the other Europe is the EU=EUROPEAN UNION,

this we want out from, they want a united states of Europe, they interfere every day, in everything we do or say, everything we use and print,
they want control of everything and are running our lives, an unwanted , unelected , incompetent corrupt European government,
this is what we want to withdraw from,

as they say,
we want to trade with them, but we don't want to be dictated by them.
that's all.
14 T_Paine (#) Feb 24th, 2016 - 01:47 pm Report abuse
The UK needs to leave before the Italian banking collapse or be stuck with their rescue.
15 Briton (#) Feb 24th, 2016 - 08:19 pm Report abuse
Some say, a weak pound is great for exports,

either way, its our pound,
and not a borrowed EURO.

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