FX Roundup: Currencies in mixed mode, pound loses further ground

Currency markets were in mixed mode on Wednesday, with none of the major crosses dominating proceedings as the pound continued to slide further.

The British currency traded yet again at six-year lows versus the dollar heading lower still, as 'Brexit' concerns dominated market chatter overnight, with a referendum on the country’s membership of the European Union set for 23 June.

At 1720 GMT, a pound fetched $1.3929 shedding another 0.66% intraday, while the euro rose 0.63% against the British currency to change hands at £0.7909 with analysts opining that a Brexit was bad for the euro as well. Overnight, addressing the UK Treasury Committee, Bank of England Governor Mark Carney said, "It does appear that recent moves in the pound sterling have been influenced by the upcoming vote.

"What matters for monetary policy is not just a move in the exchange rate but persistence of that move and the reasons behind it. In terms of our forecast, we will take exchange rate as given."

Prime Minister David Cameron confirmed the referendum date in an address to Parliament on Monday, noting: “The deal we have negotiated with the EU's 27 other states would give Britain a "special status" within the Union and ensures it never becomes part of a European super-state.”

However, in a blow to his leadership, Cameron’s Conservative Party colleague and London Mayor Boris Johnson backed the ‘leave EU’ campaign, heightening fears about a British Exit or ‘Brexit’ from the EU.

Pantheon Macroeconomics said, “The expected volatility of sterling futures has risen to levels last seen before the 2015 general election. There are compelling reasons to think, however, that the odds of a Brexit remain relatively slim.”

Kit Juckes, head of forex at Societe Generale, added: “Brexit, however, isn't just bad for the UK. It would have negative growth implications for the rest of Europe, and more importantly could cause wider political uncertainty. So far, the response to any market signs of loss of confidence in the Eurozone has come from the ECB and that isn't likely to change.”

Elsewhere, the dollar headed lower against other major forex crosses. The yen changed hands to a dollar at JPY111.43, with the US currency 0.60% lower. The greenback also fell versus the Swiss franc fetching CHF0.9863, down 0.50%.

Commodity linked currencies had a mixed afternoon. The greenback fell 0.28% against the Canadian dollar changing hands at CAD$1.3754. A plethora of other commodity currencies went sideways, particularly in Latin America, with the dollar rising 0.55% and 0.42% against the Mexican peso and the Brazilian Real respectively, but falling 0.09% versus the Colombian peso.

Finally, the Australian dollar fell 0.37% against the greenback exchanging at US$0.7175, while the New Zealand dollar also fell 0.18% exchanging at US$0.6631.