'Brexit' worries send pound plunging near 7-year low

NEW YORK-Agence France-Presse

A woman walks past a rates board outside a Forex outlet in central London, Britain, February 22 , 2016. REUTERS Photo

The pound plunged on Feb. 22 on worries that Britain may vote to leave the European Union this year, while the euro fell sharply against the dollar after poor eurozone economic data.

British Prime Minister David Cameron's deal with the EU last week to avoid a "Brexit" was quickly thrown into question after London Mayor Boris Johnson declared on Feb. 21 his support for the exit campaign in the June 23 referendum.

The pound dived to $1.4058 early Feb. 22, its lowest level since March 2009, before recovering to $1.4148 late Feb. 22. It also fell to 77.96 pence per euro.        

"London Mayor Boris Johnson openly backed the “Out” campaign to depart from the EU, rattling markets and prompting the pound to slump against most currencies," said Bernard Yaros of Moody's Analytics.

Yaros noted that the "Remain" campaign still holds support from key cabinet members and businesses.

Simon Smith, chief economist at FxPro, warned uncertainty ahead of the vote would weigh on the pound.
"For sterling, this won't be a fun time," he said.