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EU referendum: Pound down on Brexit fears EU referendum: Pound sees biggest fall in a year on Brexit fears
(35 minutes later)
The pound has dropped sharply against the dollar over uncertainty about a possible UK exit from the European Union. The pound has seen its biggest drop in more than a year against the dollar over uncertainty about a possible British exit from the European Union.
In early trading in London, the pound was down 1.4% against the dollar to $1.42000. In early trading in London, the pound fell 1.65% to $1.41670, the biggest one-day drop since January 2, 2015.
It comes after London Mayor Boris Johnson joined the campaign to leave the EU following Prime Minister David Cameron setting a June referendum date.It comes after London Mayor Boris Johnson joined the campaign to leave the EU following Prime Minister David Cameron setting a June referendum date.
Today's fall adds to losses made by the pound over recent months. The fall adds to losses made by the pound over recent months.
"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," said Sam Hill, senior UK economist at RBC Capital Markets. 'Sensitive'
So far this year, fears of a British exit from the EU - dubbed 'Brexit' - have already pushed the pound down by 3.9% against the US dollar. Analysts said that was likely to continue to direct sentiment until the vote.
"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," said Sam Hill, senior UK economist at RBC Capital Markets.
Against the yen, the pound slumped to as low as 160.40 yen, its lowest since November 2013, from 162.10 on Friday, before partially recovering.Against the yen, the pound slumped to as low as 160.40 yen, its lowest since November 2013, from 162.10 on Friday, before partially recovering.
"I don't think investors are saying Brexit is good or bad, but it's the uncertainty," said Simon Smith, chief economist at FxPro.
'Down the lift shaft'
The prime minister announced on Saturday that the EU referendum would be held on 23 June after he came back from Brussels with a renegotiation of Britain's EU membership.
According to Mr Smith, the pound went "up the escalators" on Friday and "down the lift-shaft at the start of the Asia session" after the weekend's events.
Mr Johnson's intervention, in particular, is being seen as a blow to Mr Cameron's campaign to remain in the EU.
Several other senior Conservatives - including Justice Secretary Michael Gove - have already said they would join the Out campaign.