The UK Pound Continues Fall Amid Raging Referendum Debate

The UK pound has fallen this morning GMT, and against the US dollar is currently buying $1.41, as markets continue to react negatively to sterling, since the announcement of the EU referendum date as June 23.

Against the euro, the pound has fared slightly better, and is currently buying EUR 1.28, a rise since the early hours of today, when the pound fell to purchasing in the region of EUR 1.277.

Major Asian currencies have appreciated against the pound, today sterling is buying 158 yen, a fall from just under Y160 this morning.

The pound has precipitated against the Chinese yuan, the latest figure has the pound buying RMB 9.22.

So far today, there has been a steady pattern between the pound and the yuan, but yesterday morning, sterling was buying RMB9.32.

One of the latest opinion polls compiled by ICM, found that opinion is evenly divided on this issue, with 42% of those questioned wishing to remain in the EU, and 40% saying that they want to leave it.

The survey was taken in the aftermath of the reform deal agreed by UK Prime Minister David Cameron last Friday, and ending yesterday, almost entirely before London Mayor Boris Johnson endorsed the leave campaign.

Business Group to Consult Members

The Confederation of British Industries (CBI) has said that they will consult their members again, on their views over a potential exit from the EU.

The CBI has been in favour of remaining in the EU with reform measures, and now has challenged those who want to leave the EU, to make a credible case of how a ‘Brexit’ would lead to greater prosperity.

Hitherto, big British businesses such as BT, Marks & Spencer, and Vodafone have signed a letter in The Times newspaper, explaining how they believe staying in the EU would be more advantageous for Britain.

Rating Agencies Say the EU Exit is Risky

Fitch Ratings have opined in a report that the time period to secure access to markets in the EU, in the event of leaving the EU, would leave the UK in a precarious short term economic position.

Although, the extent of the impact of this scenario is uncertain, despite a ‘no’ leading almost certainly leading to a weighing down of confidence on the British economy, and the delay of investment decisions being made.

Fitch believe that the authorities on both sides, would try to avoid disrupting the deep economic and financial integration between the UK and EU, by establishing a clear new relationship.

This would including a trade agreement that preserves UK attractiveness for investment.

It would also be likely that the freedoms of movement to work in the UK would be tightened.

There would be significant risks Fitch said, especially if the remaining EU members attempted to impose punitive conditions on the UK, in order to deter others from leaving.

Moody’s said in an announcement on the ‘Brexit’ issue. “In Moody’s view the economic costs of a decision to leave the EU would outweigh the economic benefits.”

“Unless the UK managed to negotiate a new trade arrangement with the EU that preserves at least some of the trade benefits of EU membership, the UK’s exports would suffer.”

This would cause a prolonged period of uncertainly Moody’s believes, which would negatively affect investment.