Pound Sterling (GBP) Slides Notably on Schauble Commentary

June 10, 2016 - Written by John Cameron

STORY LINK Pound Sterling (GBP) Slides Notably on Schauble Commentary

The Pound has dropped heavily close to the close of the European trading session, owing to statements from German Finance Minister Wolfgang Schauble that 'Leave' claims of free UK access to the single market after 'Brexit' are unfounded.

GBP to EUR Exchange Rate Slipped to Low 1.2700s

The Pound Sterling (currency : GBP) has once again struggled to assert itself in the global currency markets today. The UK unit started the day just above the 1.2800 threshold against the euro (currency : EUR), before slipping into the low 1.2700s.

Meanwhile the Pound US Dollar exchange rate was tipping the scales at close to 1.4500 GBP USD early on but subsequently fell into the 1.4300s.

The move out of Pound-denominated assets has partly been driven by headline-grabbing press releases from British bookmakers who have slashed their odds on a Brexit following a slew of opinion polls suggesting that ‘Leave’ is winning the EU In /Out referendum race.

Global investors have also been spooked by further commentary from international organisations pointing out the potentially dire effects which a Brexit would have on the world economy.

Several International Organisations Urge UK to Vote to 'Remain'

Statements and reports from bodies including, but not limited to, the London School of Economics (LSE), the Confederation of British Industry (CBI), the Organisation for Economic Co-operation and Development (OECD), the International Monetary Fund (IMF), the World Trade Organisation (WTO) and the trade unions, have stoked fears that a Brexit could stop the post credit crisis world economic recovery in its tracks.

The OECD’s secretary general Angel Gurria added to the overwhelming sense of nervousness amongst market participants earlier, warning that the ‘Remain’ campaign’s message is not permeating easily because there is a lot of emotion and frankly there is a lot of very misleading messaging that is going on.

I give you one example. It is often mentioned by the people who are promoting Brexit that “there is stifling regulation of the UK economy and we will now be able to deregulate”.

That is absolutely false. The UK is one of the least regulated, most flexible, open economies ... so much so that if they were on their own the improvement on regulation would be relatively modest. So you would not gain very much there.

Gurria summed up the situation by stating that British, ‘people do not have the elements to know whether that is true or not.’

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TAGS: Pound Dollar Forecasts Pound Euro Forecasts Pound Sterling Forecasts