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Boris Johnson's Brexit decision leads to biggest fall for pound in 11 months - business live Boris Johnson's Brexit decision leads to biggest fall for pound since 2010 - business live
(35 minutes later)
9.52am GMT
09:52
Looking for Andy Sparrow's liveblog? It's here
My colleague Andrew Sparrow is up and running, covering all the drama in Westminster in his Politics Live blog.
He’s kicked off with the news that Boris’s father, Stanley, has firmly denied that his son is scheming to become prime minister by supporting the Out campaign.
Related: Boris Johnson's Brexit declaration could be 'career-ending', his father claims - Politics live
Stanley told Radio 4’s Today programme that:
I think he has done a really well-thought-out move. When I say move, it is a move in the sense it represents his deep conviction that at this moment this is what he needed to do. Honestly, I think to say this is a careerist sort of move would be a total travesty.
I cannot think of any more career-ending move than to do what he did yesterday, in the sense that he is leaving the mayoralty in May. If he wanted to get a nice job in the cabinet on May 8 this is not the way to do it.
Boris Johnson's dad claims Boris's Brexit move cd be 'career-ending' (plus why he wasn't convincing) - https://t.co/wLQYpzpfMJ
9.46am GMT
09:46
The pound has fallen against all 31 of the other major currencies this morning, showing the scale of the rout:
#Brexit fears batter #sterling (all 31 of its major peers are rising against the pound)... pic.twitter.com/UzbE6Kx83G
9.38am GMT
09:38
Pound suffers biggest fall since 2010
Ouch. The pound has now suffered its biggest one-day fall since the 2010 general election.
This morning’s 1.7% plunge hasn’t been seen since May 2010, according to the data on our Reuters terminals.
Bloomberg agrees, saying:
The pound dropped 1.7% to $1.4163 as of 9:20 a.m. in London, set for the biggest decline since the the day of the U.K. General Election on May 6, 2010.
While the currency is down 3.9% this year, it remains above an almost seven-year low of $1.4080 reached in January.
Valentin Marinov, currency strategist at Credit Agricole, confirms that the City is more worried about the June referendum:
“The fact that prominent members of the Conservative Party announced they will campaign for Britain to leave the EU likely underscored investors’ concerns that Brexit risks could increase from here despite the deal.”
Last time options markets were this bearish on GBPUSD we were recovering from the 2010 election/hung parliament - pic.twitter.com/cJpjRIR1j3
9.20am GMT
09:20
Ilya Spivak, currency strategist at DailyFX, suggests Boris’s popularity is fuelling today’s sterling selloff:
“The British Pound slumped at the start of the trading week after London Mayor Boris Johnson said he would campaign for the UK to leave the EU ahead of a referendum on membership in the regional bloc set for June 23.
A recent poll showed Johnson is second only to Prime Minister David Cameron in influencing likely voters.
(that’s the IPSOS Mori poll I posted earlier)
9.17am GMT9.17am GMT
09:1709:17
Pound selloff deepensPound selloff deepens
Sterling is plumbing new depths, as Boris Johnson’s decision to defy David Cameron continues to reverberate around the trading floors.Sterling is plumbing new depths, as Boris Johnson’s decision to defy David Cameron continues to reverberate around the trading floors.
The pound has now dropped to $1.416 against the US dollar, a fall of 1.7% or 2.5 cents.The pound has now dropped to $1.416 against the US dollar, a fall of 1.7% or 2.5 cents.
That’s the biggest fall in at least 11 months.
This chart shows how sterling took an immediate dive last night when trading began in Asia, and then weakened further once European traders got to their desks:This chart shows how sterling took an immediate dive last night when trading began in Asia, and then weakened further once European traders got to their desks:
Jeremy Cook of currency firm World First reckons the City is over-reacting to Boris’s move.Jeremy Cook of currency firm World First reckons the City is over-reacting to Boris’s move.
Do I think that BoJo is worth a 2 cent move in GBPUSD? Absolutely not, but markets wanted to smack GBP & he has handed them a big old batDo I think that BoJo is worth a 2 cent move in GBPUSD? Absolutely not, but markets wanted to smack GBP & he has handed them a big old bat
UpdatedUpdated
at 9.18am GMT at 9.26am GMT
9.15am GMT9.15am GMT
09:1509:15
This handy chart from Bloomberg shows how the pound has become much more volatile (white line) in recent weeks:This handy chart from Bloomberg shows how the pound has become much more volatile (white line) in recent weeks:
UpdatedUpdated
at 9.16am GMTat 9.16am GMT
9.06am GMT9.06am GMT
09:0609:06
Here’s another sign of growing alarm in the City over the EU referendum.Here’s another sign of growing alarm in the City over the EU referendum.
The cost of protecting against wild swings in the value of the pound has hit a 51-month high this morning.The cost of protecting against wild swings in the value of the pound has hit a 51-month high this morning.
That suggests investors are more worried about Britain leaving the European Union, following Boris Johnson’s decision to back the Out campaignThat suggests investors are more worried about Britain leaving the European Union, following Boris Johnson’s decision to back the Out campaign
Reuters has the details:Reuters has the details:
The six-month implied volatility in sterling/dollar -- a gauge of how sharp currency moves will be -- rose to 12.2 percent its highest since late 2011, according toReuters charts. The contract captures the date of the referendum, scheduled for June 23.The six-month implied volatility in sterling/dollar -- a gauge of how sharp currency moves will be -- rose to 12.2 percent its highest since late 2011, according toReuters charts. The contract captures the date of the referendum, scheduled for June 23.
Sterling options point to heightened #Brexit stress https://t.co/7s1PD1vbGl pic.twitter.com/hZIHCvUf7jSterling options point to heightened #Brexit stress https://t.co/7s1PD1vbGl pic.twitter.com/hZIHCvUf7j
8.53am GMT8.53am GMT
08:5308:53
RBS Capital Markets analyst Sam Hill also blames the Out Campaign for weakening the pound:RBS Capital Markets analyst Sam Hill also blames the Out Campaign for weakening the pound:
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.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.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.
Fantastic pictures of Boris Johnson leaving his home this morning. pic.twitter.com/7mG2sH6ZpTFantastic pictures of Boris Johnson leaving his home this morning. pic.twitter.com/7mG2sH6ZpT
8.49am GMT8.49am GMT
08:4908:49
Scotiabank analyst Alan Clarke agrees that Boris’s intervention is significant. He told clients this morning that:Scotiabank analyst Alan Clarke agrees that Boris’s intervention is significant. He told clients this morning that:
Another key development over the weekend was that London Mayor, Boris Johnson MP came out in support of the ‘leave’ campaign. This is potentially crucial since he is the most popular politician in the country and connects with young and old voters alike.Another key development over the weekend was that London Mayor, Boris Johnson MP came out in support of the ‘leave’ campaign. This is potentially crucial since he is the most popular politician in the country and connects with young and old voters alike.
UpdatedUpdated
at 8.53am GMTat 8.53am GMT
8.35am GMT8.35am GMT
08:3508:35
UK borrowing costs are up this morningUK borrowing costs are up this morning
British government debt appears to be suffering from the swirling uncertainty over the EU referendum.British government debt appears to be suffering from the swirling uncertainty over the EU referendum.
The price of 10 year gilts (bonds issued by the UK) has fallen this morning. That pushed up the interest rate, or yield, on the debt to 1.44%, up from 1.41% on Friday.The price of 10 year gilts (bonds issued by the UK) has fallen this morning. That pushed up the interest rate, or yield, on the debt to 1.44%, up from 1.41% on Friday.
That isn’t a huge move, and it still leaves Britain’s borrowing costs at near-record lows.That isn’t a huge move, and it still leaves Britain’s borrowing costs at near-record lows.
But it does indicate that investors are taking the Brexit threat more seriously.But it does indicate that investors are taking the Brexit threat more seriously.
didn't really have a view previously, but interesting to see that early mkt reaction is to mark down GBP & Gilts on #Brexit worriesdidn't really have a view previously, but interesting to see that early mkt reaction is to mark down GBP & Gilts on #Brexit worries
UpdatedUpdated
at 8.36am GMTat 8.36am GMT
8.30am GMT8.30am GMT
08:3008:30
The pound is suffering from the fresh uncertainty over Britain’s future, explains Tony Cross, market analyst at Trustnet Direct:The pound is suffering from the fresh uncertainty over Britain’s future, explains Tony Cross, market analyst at Trustnet Direct:
The “Brexit” conversation took another step forward over the weekend and this has the potential to dominate many a conversation over the next four months, but it’s worth bearing in mind that some established fund managers have already come forward to say that in or out will have little impact on the financial outlook for UK Plc.The “Brexit” conversation took another step forward over the weekend and this has the potential to dominate many a conversation over the next four months, but it’s worth bearing in mind that some established fund managers have already come forward to say that in or out will have little impact on the financial outlook for UK Plc.
What is significant however is that this introduces a new layer of uncertainty into the equation, and that’s something broadly disliked by financial markets.What is significant however is that this introduces a new layer of uncertainty into the equation, and that’s something broadly disliked by financial markets.
8.24am GMT8.24am GMT
08:2408:24
Although the pound is suffering this morning, shares in London are doing well.Although the pound is suffering this morning, shares in London are doing well.
The FTSE 100 has jumped by 77 points, or 1.3% this morning, putting the blue-chip index back over the six thousands point mark at 6027. That extends its recent recovery, following heavy losses in January and early February.The FTSE 100 has jumped by 77 points, or 1.3% this morning, putting the blue-chip index back over the six thousands point mark at 6027. That extends its recent recovery, following heavy losses in January and early February.
Mining stocks are leading the rally, suggesting fears of a global recession have eased (just in time for investors to worry about Brexit instead).Mining stocks are leading the rally, suggesting fears of a global recession have eased (just in time for investors to worry about Brexit instead).
8.10am GMT8.10am GMT
08:1008:10
Bloomberg have confirmed that sterling is suffering its biggest selloff since last March:Bloomberg have confirmed that sterling is suffering its biggest selloff since last March:
Pound Falls Most in 11 Months as Johnson Backs ‘Brexit’ CampaignPound Falls Most in 11 Months as Johnson Backs ‘Brexit’ Campaign
8.09am GMT8.09am GMT
08:0908:09
The pound is likely to keep falling in the run-up to June’s vote, City experts fear.The pound is likely to keep falling in the run-up to June’s vote, City experts fear.
Currency expert Kit Juckes of Société Générale, the French bank, warns:Currency expert Kit Juckes of Société Générale, the French bank, warns:
The EU ‘Brexit’ referendum is going to dominate media debate over the next 124 days. Opinon polls show a small lead for the ‘out’ camp, but a large body of ‘undecideds’ will decide the eventual outcome....The EU ‘Brexit’ referendum is going to dominate media debate over the next 124 days. Opinon polls show a small lead for the ‘out’ camp, but a large body of ‘undecideds’ will decide the eventual outcome....
I think we are likely to see further sterling weakness ahead of the vote itself, as the debate rages and uncertainty undermines confidence. I can’t imagine the opinion polls moving decisively enough in either direction for clarity to emerge before June 23.I think we are likely to see further sterling weakness ahead of the vote itself, as the debate rages and uncertainty undermines confidence. I can’t imagine the opinion polls moving decisively enough in either direction for clarity to emerge before June 23.
8.02am GMT8.02am GMT
08:0208:02
Sterling is also losing ground against the euro this morning.Sterling is also losing ground against the euro this morning.
The pound has lost almost one eurocent, to €1.281, down from €1.29.The pound has lost almost one eurocent, to €1.281, down from €1.29.
That means one euro is worth 78.06p, up from 77.30p on Friday night - before David Cameron struck his EU deal.That means one euro is worth 78.06p, up from 77.30p on Friday night - before David Cameron struck his EU deal.
7.53am GMT7.53am GMT
07:5307:53
This poll shows why City investors are taking the London Mayor’s move seriously:This poll shows why City investors are taking the London Mayor’s move seriously:
UpdatedUpdated
at 8.04am GMTat 8.04am GMT
7.52am GMT7.52am GMT
07:5207:52
Pound on track for biggest fall in 11 monthsPound on track for biggest fall in 11 months
The pound has hit a three week low against the US dollar thanks to Boris’s intervention.The pound has hit a three week low against the US dollar thanks to Boris’s intervention.
This makes sterling the worst performing major currency this morning.This makes sterling the worst performing major currency this morning.
As things stand, the pound is on track for its biggest fall since March 19 2015, when it fell by 1.5% against the dollar.As things stand, the pound is on track for its biggest fall since March 19 2015, when it fell by 1.5% against the dollar.
$GBP taking a beating in early European trade #BorisJohnson pic.twitter.com/2fXQVfvT3n$GBP taking a beating in early European trade #BorisJohnson pic.twitter.com/2fXQVfvT3n
UpdatedUpdated
at 7.59am GMTat 7.59am GMT
7.30am GMT7.30am GMT
07:3007:30
Pound bashed by Boris's Brexit movePound bashed by Boris's Brexit move
Boris Johnson’s shock decision to back the Brexit campaign has sent the pound sliding, on track for its biggest fall in months.Boris Johnson’s shock decision to back the Brexit campaign has sent the pound sliding, on track for its biggest fall in months.
Asian traders were swift to react to the sight of the London Mayor telling a media scrum yesterday that he would be supporting the Out campaign in June’s EU referendumAsian traders were swift to react to the sight of the London Mayor telling a media scrum yesterday that he would be supporting the Out campaign in June’s EU referendum
And the selloff is accelerating right now -- wiping more than two cents off the pound. It has fallen from $1.44 to just $1.419, a drop of nearly 1.5%.And the selloff is accelerating right now -- wiping more than two cents off the pound. It has fallen from $1.44 to just $1.419, a drop of nearly 1.5%.
That’s a very chunky move for a currency, suggesting investors are scrambling to react to Boris’s call for a “once-in-a-lifetime chance to vote for real change in Britain’s relations with Europe”.That’s a very chunky move for a currency, suggesting investors are scrambling to react to Boris’s call for a “once-in-a-lifetime chance to vote for real change in Britain’s relations with Europe”.
Writing in the Telegraph, Johnson argues:Writing in the Telegraph, Johnson argues:
This is the only opportunity we will ever have to show that we care about self-rule. A vote to Remain will be taken in Brussels as a green light for more federalism, and for the erosion of democracy.This is the only opportunity we will ever have to show that we care about self-rule. A vote to Remain will be taken in Brussels as a green light for more federalism, and for the erosion of democracy.
And here’s the damage:And here’s the damage:
Boris’s move has raised the stakes in the referendum battle, and prompted bookmakers to narrow the odds. But the In Campaign are still the favourite.Boris’s move has raised the stakes in the referendum battle, and prompted bookmakers to narrow the odds. But the In Campaign are still the favourite.
Chris Weston of City firm IG explains:Chris Weston of City firm IG explains:
Boris Johnson (BoJo) showing his hand does throw a spanner in the works, but the odds of a ‘Brexit’ are still around 35%.Boris Johnson (BoJo) showing his hand does throw a spanner in the works, but the odds of a ‘Brexit’ are still around 35%.
If the referendum can be won by the media then a scan of the headlines would say the odds of a ‘Brexit’ is modestly higher, but clearly the ‘Leave’ camp would certainly have liked a longer lead time.If the referendum can be won by the media then a scan of the headlines would say the odds of a ‘Brexit’ is modestly higher, but clearly the ‘Leave’ camp would certainly have liked a longer lead time.
A weaker pound will be welcomed by British exporters, and the tourism industry. But it won’t particularly please the big banks in the City, who like sterling to be strong.A weaker pound will be welcomed by British exporters, and the tourism industry. But it won’t particularly please the big banks in the City, who like sterling to be strong.
UpdatedUpdated
at 7.43am GMTat 7.43am GMT
6.54am GMT6.54am GMT
06:5406:54
Introduction: Brexit talk and eurozone PMIsIntroduction: Brexit talk and eurozone PMIs
Good morning, and welcome to our rolling coverage of the world economy, the financial markets, the eurozone and business.Good morning, and welcome to our rolling coverage of the world economy, the financial markets, the eurozone and business.
Today could be dominated by talk about Europe.Today could be dominated by talk about Europe.
With Britain’s new arrangement with the EU agreed, but not yet approved by the people, the City is considering the implications of David Cameron’s deal. Could the polls be right (for once), when they say the Remain side holds a healthy lead. Or could the London Mayor’s decision to back the Out campaign reshape the whole campaign?With Britain’s new arrangement with the EU agreed, but not yet approved by the people, the City is considering the implications of David Cameron’s deal. Could the polls be right (for once), when they say the Remain side holds a healthy lead. Or could the London Mayor’s decision to back the Out campaign reshape the whole campaign?
Guardian front page, Monday 22 February 2016: Johnson comes out for Brexit pic.twitter.com/zxFcEI0serGuardian front page, Monday 22 February 2016: Johnson comes out for Brexit pic.twitter.com/zxFcEI0ser
Boris’s bombshell has already put sterling under pressure in Asian trading, and we’ll see today how the City digests his move. It could be a lively four months, with the referendum due on 23rd June.Boris’s bombshell has already put sterling under pressure in Asian trading, and we’ll see today how the City digests his move. It could be a lively four months, with the referendum due on 23rd June.
Oh boy... reading that we're 124 days from #Brexit referendum (thanks @kitjuckes). 💭 must not mix up my countdown clocks 💭Oh boy... reading that we're 124 days from #Brexit referendum (thanks @kitjuckes). 💭 must not mix up my countdown clocks 💭
But how strong is the European economy anyway? We get fresh clues this morning, when purchasing manager index data (PMIs) from the eurozone are released. That will will show how fast, or slow, the euro economy is growing:But how strong is the European economy anyway? We get fresh clues this morning, when purchasing manager index data (PMIs) from the eurozone are released. That will will show how fast, or slow, the euro economy is growing:
We’re expecting a gentle start to trading in London, with the main indices tipped to rise a little. Here’s IG’s opening calls:We’re expecting a gentle start to trading in London, with the main indices tipped to rise a little. Here’s IG’s opening calls:
Our European opening calls:$FTSE 5982 up 32$DAX 9441 up 53$CAC 4253 up 30$IBEX 8248 up 54$MIB 17000 up 91Our European opening calls:$FTSE 5982 up 32$DAX 9441 up 53$CAC 4253 up 30$IBEX 8248 up 54$MIB 17000 up 91
In the corporate world, HSBC will be under scrutiny after reporting profits of £13.2bn ($18.8bn) for the last year, and revealing its boss has taken a pay cut:In the corporate world, HSBC will be under scrutiny after reporting profits of £13.2bn ($18.8bn) for the last year, and revealing its boss has taken a pay cut:
Related: HSBC full-year profits edge up to £13.2bn as chief Stuart Gulliver takes pay cutRelated: HSBC full-year profits edge up to £13.2bn as chief Stuart Gulliver takes pay cut
And Associated British Foods, which owns discount clothing chain Primark, is announcing results this morning.And Associated British Foods, which owns discount clothing chain Primark, is announcing results this morning.
We’ll be tracking all the main events through the day....We’ll be tracking all the main events through the day....
UpdatedUpdated
at 7.33am GMTat 7.33am GMT