BY BEN KERRIGAN
Fears that the British pound is heading for a deep plummet because of the possibility of Britain leaving the EU have been expressed by economic analysts yesterday.
Following the announcement by Borris Johnson that he will be supporting the exit of Britain from the EU its biggest drop in nearly seven years against the dollar amid uncertainty about a possible British exit from the EU. Analysts yesterday told reporters that the uncertainty of Britain’s position in relation to the ‘in or out’ referendum scheduled for June this year is harming the stability of the currency and will continue to direct public sentiment until the all decisive vote takes place this summer. In the past 18 months, the pound has already dropped beyond 17% against the dollar, particularly because of interest rates now and how their predictions for the future.
The head of the UK bank has indicated that there will be no rise in interest rates this year, even though America had a rise in interest rates last year. Higher interest rates increase the flow of money circulating in the central bank and enables a diversity of international trade in a way that empowers the economic position of the trading country. If the pound takes a weak look, exporters will flourish at the expense of British importers, because they will make British goods cheaper on the international market. The Sterling has fallen from its $1.7165 peak since July and was once down at $1.41020 in its biggest drop in 24 hours for the past 7 years. After Cameron’s announcement setting an official date for Britain’s referendum for June 23rd this year. The strong intervention by London Mayor, Borris Johnson, hasn’t helped matters for the prime Minister or economic forecasts for the future, but has made the divide between those in favor and those against, even sharper. The camp for the pro EU exit is building and getting stronger, and the Prime Minister will do his best to try and rally enough support to out muscle his rivals on this important but very divisive issue.
Against the Euro, the pound is down 1.2% to €1.2774. Against the yen, the pound has slumped to 160.075 yen, its lowest since late 2013.
Chief economist at FxPro , Simon Smith, said in a statement “I don’t think investors are saying Brexit is good or bad, but it’s the uncertainty,” said Simon Smith, chief economist at FxPro. The eventual decision on whether Britain stays or leaves the EU will have an effect on the economic well being of this country, however it remains debatable whether it will be positive or negative either way. Pro EU campaigners believe exit from the EU will damage the economic power of the country and affect the prospects of international trade. However, anti EU campaigners believe the UK can sustain itself through innovation in trade and a myriad of other economic activities. Many are particularly against what is perceived to be an unrestrained influx of immigrants from the EU into the country, with the fear of emerging terrorists slipping in amongst them as one of the main fears form that group. So far, fears of a British exit from Europe(Brexit) has already pushed the pound down by 4%.
