Pound posts biggest fall in seven years on Brexit fears

The British pound fell by its biggest margin against the dollar since 2009 on Monday, as fears of a possible British exit from the European Union, or Brexit, spooked traders.

The currency plunged by 2.1 per cent to 1.4107 dollars by mid-afternoon, after London mayor Boris Johnson, one of the ruling Conservative party's most popular figures, gave a major boost to the Brexit campaign on Sunday by announcing his support for leaving the EU.

Prime Minister David Cameron agreed a package of reforms with other EU leaders last week, urging voters to support Britain's continued EU membership in an in-out referendum on June 23.

Ratings agency Moody's on Monday warned that "the economic costs of a decision to leave the EU would outweigh the economic benefits."

"We consider it positive that the referendum will take place as soon as June, as a lengthy period of uncertainty on the part of firms and investors would damage the UK's economic growth prospects," said Kathrin Muehlbronner, a senior vice president at Moody's.

"That said, the outcome of the referendum remains wide open," Muehlbronner said. "In our view, a decision to leave the EU would be credit negative for the UK economy."

Last update: Fri, 24/06/2016 - 08:49
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