The referendum on U.K.’s membership in the European Union is set to take place on June 23. The possibility for a ‘Brexit’ (Britain leaving the EU) might create trouble for the currency’s position. Analyses show that in the long run the pound is going to struggle.
Data indicates that the sterling’s decline will extend beyond the day of the referendum, which could lead to a major shift in the EU. Versus all of its counterparts in the G10 currencies, just this year the pound has already dropped at least 2 percent. Option prices suggest that over the next three months, it will fall even further against each of the most trader currencies.
A lot of weight was put on the pound this year, due to the concern that the U.K. might leave the world’s biggest single market. The Brexit could put growth and investments at risk, should the people vote to leave.
As of Thursday, the sterling was sent down 4 percent. This is about $1.41 and it came at a time when the stock and bond markets were about to be closed for the long weekend of the Easter holidays.
On the European scene, experts are expecting for the pound to soon reach the psychological value of 80 pence per euro, which will give the chance for a test of what and how negative effects from the Brexit could be. Analysts state that the last time the pound was that weak against the euro has been at the end of 2014.