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Pound slumps as Brexit support gathers pace

London Stock ExchangeMon close: The pound plunged to a six-year low today as Cabinet ministers joined the campaign to leave the European Union.

It was down to $1.41, the sharpest decline since January 2009.

The fall was said to be exacerbated by London Mayor Boris Johnson’s decision on Sunday evening to support the Leave campaign. As a potential Prime Minister in waiting he is regarded as a major influence on the outcome of the 23 June vote.

Rajesh Agrawal of foreign exchange broker RationalFX and business advisor to Sadiq Khan MP, the Labour Party’s candidate for the upcoming London Mayoral Election, said: “The decline in the value of the pound today is further evidence of the dangerous uncertainty factor surrounding this referendum for the British economy.

“This is just a small taste of what we should expect if Britain actually votes to leave.

“Even the strongest advocates for Brexit admit that leaving the EU is risky in the short to medium term, and at best a gamble in the long run. Voters will need to weigh this up as they make their choice.”

Top fallers on the FTSE 100 index were property stocks, viewed as one of the domestic sectors most exposed to a possible Brexit.

However,  overall direction of the index was upwards. It rose 87.5 points to 6,037.73, led by miners which were the top five risers. Commodities are less exposed to a possible Brexit.

Oil also rose. Brent crude climbed 4.4% to $34.53 per barrel and West Texas Intermediate surged 5.1% to $33.47 per barrel 4.20pm.

The manufacturing sector stabilised in February, reporting little change on January’s muted performance, according to the CBI Industrial Trends Survey.

The survey of 497 manufacturers found that total order books remained steady after a fall in January, whilst export orders saw a very slight improvement from the previous month. Both now stand at around average levels.

Output volumes were flat over the past three months, a very marginal improvement on the previous quarter. Expectations for production over the coming quarter are again positive, albeit only somewhat above average and a little weaker than last month’s expectations.

Manufacturers expect a small fall in average selling prices in the next three months, with the metals, food & drink and chemicals and mechanical engineering sectors all expecting a drop in prices.

 

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