FX round-up: Sterling tumbles as renewed Brexit fears spook traders
Sterling tumbled against major crosses as spooked traders dumped the currency after a new poll revealed respondents favoured Britain leaving the European Union.
FTSE 250
19,391.30
17:09 19/04/24
FTSE 350
4,341.08
17:09 19/04/24
FTSE All-Share
4,296.41
17:08 19/04/24
Travel & Leisure
7,521.61
17:10 19/04/24
William Hill
271.80p
09:58 22/04/21
Britain votes 23 June on whether remain part of the single-currency bloc.
At 17:05 BST, sterling was down 0.88% at $1.4511, off 0.89% at €1.3028 and lower 1.24% to 160.670 yen. It flopped against commodity units, particularly the aussie, kiwi and rand.
Britain's currency has enjoyed support in recent weeks on a string of polls that suggested a so-called Bremain outcome was more likely than a so-called Brexit.
But, on Tuesday, a telephone poll by ICM research on behalf of The Guardian showed 45% of respondents supported UK leaving the EU, against 42% for remaining and 13% undecided.
This finding joined other recent data that implied a Brexit could still be on the cards.
Bookmaking firm William Hill said 85% of referendum bets on public-holiday Monday favoured a Brexit. Another poll, the latest from ORB, revealed a sharp drop in the remain camp's lead -- support for Bremain was now at 51.0%, while that for Brexit was at 46.0%.
Pantheon Macroeconomics' chief UK economist, Samuel Tombs, said the poll underlined that it was not a formality that the UK would be a full member of the EU in a month's time.
"Sterling will fall like a stone in the unlikely event of a Brexit," Tombs argued, assessing that sterling's risks on referendum night lay greatly to the downside.
"Even if UK interest rates steady, sterling's behaviour so far this year suggests that it could fall to about $1.25, as capital inflows dry up and outflows soar," he added.
All of this came against a backdrop of mostly-as-expected Euro-zone data, including that for consumer-price inflation, M3 Money Supply and unemployment.
"April's euro-zone monetary data suggest that economic growth remains fairly slow," opined Capital Economic's European economist, Jack Allen.
"While the full effects of the European Central Bank's expanded stimulus measures will not yet have been felt, we doubt that they will boost money and lending growth significantly."
Meantime, the US dollar fell moderately against the euro, yen and commodity currencies barring a rise versus the loonie. The dollar-spot index rose 0.23% to $95.740.
The greenback has been in particular focus for weeks now, with several but not all Federal Reserve officials espousing hawkish sentiments on when the next US rates rise will occur, with pundits picking June or July most likely.
Late on Friday, Fed chair Janet Yellen said on Friday that a rate hike in the coming months "would be appropriate" if the economy and labour market continued to show an improvement.
Data out stateside on Tuesday revealed US consumer confidence unexpectedly weakened in May, while personal consumption for April tested a seven-month high and the Chicago purchasing-managers' index surprised in May by contracting.
As Tomb explained: "We think sterling will fall to $1.43 by the end of the year, amid a faster tightening of monetary policy in the US than UK."