Fears of a possible UK exit from the European Union have seen the pound drop sharply against the dollar.
The fall of 1.4%, the biggest in 11 months, was in part triggered by the news London Mayor Boris Johnson will be joining the campaign to leave the EU after the date was set for a June referendum.
RBS Capital Markets analyst Sam Hill commented: “With both Michael Gove and Boris Johnson coming down on the “Leave” side of the debate, and almost half of the Conservative MPs, it is understandable that Sterling’s initial move has been lower.
“Uncertainty is the only certainty where the economics of Brexit is concerned. So, with political reaction to Friday’s deal looking more mixed than the Prime Minister would have hoped for, in the short term it is likely that the exchange rate will be sensitive to news which is seen to increase the probability of Brexit.”
