FX Roundup: Pound continues to slide on 'Brexit' concerns

The pound sterling continued to trade at six-year lows versus the dollar, as 'Brexit' concerns dominated market chatter on Tuesday, with a referendum on the country’s membership of the European Union set for 23 June.

At 1523 GMT, a pound fetched $1.4085 shedding another 0.46% intraday, while the euro rose 0.30% against the British currency to change hands at £0.7818 with analysts opining that a Brexit was bad for the euro as well. Analysts at Capital Economics forecast the pound will fall further against the dollar this year to $1.30 from around $1.41 now.

Earlier in the session, 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, with opinion polls suggesting the country remains divided about whether or not to stay in the union.

Kit Juckes, head of forex at Societe Generale, said, “Brexit would be bad for UK growth and the countdown to the vote on June 23 is bad for investor confidence and therefore, the pound. We remain bearish, of GBP/NOK, GBP/JPY, and GBP/USD for that matter. There will be corrections as move gets stretched but they'll be chances to sell, at least until June 22.”

“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 JPY112.10, with the US currency 0.73% lower. The greenback also fell versus the Swiss franc fetching CHF0.9921, down 0.76%.

However, commodity linked currencies lost the previous session’s momentum. The greenback rose 0.56% against the Canadian dollar changing hands at CAD$1.3783. A plethora of other commodity currencies headed lower along with the loonie, particularly in Latin America, with the dollar rising 0.42%, 0.34% and 0.65% against the Mexican, Colombian pesos and the Brazilian Real respectively.

Finally, the Australian dollar fell 0.11% against the greenback exchanging at US$0.7219, while the New Zealand dollar also fell 0.45% exchanging at US$0.6669.