Falling pound could cost Britons on holiday overseas

How will sterling react to today’s United Kingdom ecostats and might there be a rebound?

The British pound last stood at $1.3942, down 3.2 percent so far this week, with a test of its 2009 low of $1.35 within sight.

Speaking of the GBPUSD, the pair suffered extreme losses on Monday with prices plummeting to fresh 7-year lows at 1.4057 and may decline further as concerns intensify over the impact of a Brexit. But at this point, “there is very little support between where we are now and the lows we saw in 2009”.

The assertion from leading “Leave” campaigner Michael Gove MP overnight that the raft of reforms negotiated by the United Kingdom delegation in Brussels last weekend is not “legally binding” as the Prime Minister has previously asserted came as a blow to Sterling. See MNI Main Wire at 1:36 a.m. ET.

Market participants don’t seem to be harbouring excessively high hopes for the meeting, said Masashi Murata, currency strategist for Brown Brothers Harriman in Tokyo.

BK’s Schlossberg said turbulence in capital markets may make the United Kingdom electorate reconsider their choices but until the market believes that there is a sentiment change, the volatility is likely to continue.

Higgins reminded that the sterling’s “slide had been completed unwound by the time the referendum took place eleven days later”. It would have negative growth implications for the rest of Europe, and more importantly could cause wider political uncertainty.

At the $1.4058 low posted earlier Monday, cable was down 4.2% from the $1.4668 high posted February 4 and down 11.8% from the 2015 high of $1.5930, posted June 18. She added that “overall weakness in sterling lately” is owing to signs that the Bank of England is in no rush to follow the Fed by raising interest rates, “as well as a fairly volatile backdrop in equity markets” that has seen a switch into haven investments such as German bonds.

The latest poll showed the “In” camp ahead at 51 percent, versus 39 percent for “Out”, with 10 percent undecided.

“This perceived probability could rise, as 20% of the electorate has not decided which way to vote”, he said.

Britain’s currency is falling against the dollar amid uncertainty over a possible Brexit – but also because interest rates in the United Kingdom are set to stay lower for longer, while they are expected to keep rising in the US.

The International Monetary Fund said in a report about the British economy Wednesday that the specter of “Brexit” could hurt growth.

Stock markets were down too – the FTSE 100 shedding 1.6%, or 95 points, by the close amid more steep falls for volatile mining stocks such as Glencore, Anglo American and BHP Billiton.

Sterling was the biggest decliner, sliding to a seven-year trough of $1.4057 as worries grew about the possibility of a British exit or “Brexit” from the EU.