The London Mayor’ statement supporting ‘Brexit’ sent the pound into a nosedive. After Boris Johnson said that agreements reached with the help of David Cameron would not change Britain’s status in the European Union, the sterling went into a tailspin to nearly a seven-year low.
“Sovereignty is people's ability - the ability of the public - to control lives and to make sure that the people they elect are able to pass the laws that matter to them. The trouble is - with Europe – that [sovereignty] is being greatly eroded and you are seeing it more and more of employment, over border controls, over human rights, over all sorts of stuff,” the London Mayor said. As a result, the pound plummeted against sixteen currencies. The sterling sank by 2.42% against the dollar to 1.4058 following BoJo’s comments, but later the pound recovered to 1.4165. Still, it tumbled to its lowest level since March 2009 on an intraday basis. The pound declined by 1.5% to 1.2750 against the euro.
Experts say that the results of future surveys could increase volatility further. “The pound’s weakness is a product of uncertainty of the UK’s ongoing membership of the union, not the timing of the poll,” David Page, a senior economist at AXA Investment Managers in London, expressed his opinion. “Weakness is likely to reflect any increased perception of the likelihood to leave and as such is likely to be a constant feature over the coming months.” All in all, pound traders should hone in on statements of popular officials in the UK.
