Pound falls to fresh 7-year low on 'Brexit' fears

The Pak Banker - - MARKETS/SPORTS -

The pound on Wed­nes­day fell below $1.40 to a fresh seven-year low on grow­ing wor­ries that Bri­tain may vote to leave the Euro­pean Union, as Prime Min­is­ter David Cameron ramps up his bid to stay in the 28-na­tion bloc.

Ster­ling briefly dropped as low as $1.3975 in morn­ing Tokyo trade, its low­est since March 2009. Bri­tain's cur­rency has been un­der pres­sure since Cameron's deal with the EU to avoid a "Brexit" last week was handed a set­back as pop­u­lar Lon­don Mayor Boris John­son de­clared his sup­port for the exit cam­paign in the June 23 ref­er­en­dum.

Six mem­bers of Cameron's cab­i­net an­nounced they would sup­port leav­ing, a move that un­der­scored rifts in the rul­ing Tory Party. Cameron has pushed back, warn­ing that a vote to leave the EU would risk the coun­try's eco­nomic and na­tional se­cu­rity. On Tues­day, the bosses of more than a third of Bri­tain's top com­pa­nies urged vot­ers to keep the coun­try in the EU, warn­ing that an exit would threaten jobs. "'Brexit' is cer­tainly weigh­ing on the pound," said Daniel Bre­hon, a cur­rency strate­gist at Deutsche Bank.

"But struc­tural con­cerns such as the cur­rent-ac­count deficit were al­ready a prob­lem be­fore­hand," he added. In other trad­ing, tur­moil on global mar­kets, fall­ing oil prices and wor­ries about China's econ­omy are sup­port­ing the yen as in­vestors look for as­sets seen as safe bets. On Wed­nes­day, the dol­lar weak­ened fur­ther to 111.98 yen from 112.08 yen in New York.

"We need to be wary of dol­lar-yen break­ing below 110 this week," Masato Yanagiya, head of for­eign-ex­change and money trad­ing at Su­mit­omo Mit­sui Bank­ing, told Bloomberg News. "The yen bears are gone." The euro, mean­while, slipped to 123.21 yen from 123.49 yen in US trad­ing and $1.1003 from $1.1017. The com­mon cur­rency has been hit by un­cer­tainty over Bri­tain's EU vote and suf­fered sell­ing af­ter the Tues­day re­lease of weak Ger­man busi­ness con­fi­dence data.

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