LONDON – The Latest on global financial markets (all times local):
The British pound isn’t the only currency suffering in the wake of fears that the country may vote to leave the European Union in a referendum this June.
The euro, the currency used by 19 EU states, is also under pressure amid fears that a British exit will cause havoc — economically and politically — across the region.
Kit Juckes, global head of foreign exchange strategy at Societe Generale, says a British exit “would have negative growth implications for the rest of Europe, and more importantly could cause wider political uncertainty.”
The euro has also been weighed down by soft economic data Tuesday, notably from Germany’s Ifo Institute which reported that its closely watched confidence index is down for the third month running.
The euro is down 0.1 per cent at $1.1015.
There’s no sign of any let-up in the selling pressure on the British pound.
Fears that the country may vote to leave the European Union in a national vote in June have weighed heavily on the currency this week. On Tuesday, it’s down 0.3 per cent at $1.4107. On Monday, it had fallen to a 7-year low of $1.4058, before recovering.
FXTM Research Analyst Lukman Otunuga says “the pound may be left vulnerable and open to further losses moving forward” in light of the anxieties ahead of the referendum on June 23 and the economic uncertainties of a possible British exit from the EU.
Worries over the economic implications lay at the heart of a letter from nearly 200 business leaders in Britain that urged the country to back continued membership of the 28-country bloc.
In the letter published in The Times, the leaders say business “needs unrestricted access” to the European market in order to grow and invest.
The rally across European stock markets ran out of steam in early trading after a soft overnight performance in Asia and as oil prices weakened again.
Among the major indexes, Germany’s DAX is trading 0.9 per cent lower at 9,485, while the FTSE 100 index of leading British shares is down 0.7 per cent at 5,996.
After last week’s strong performance and Monday’s big gains, most indexes in Europe remain well up from their recent lows.
However, Mike van Dulken, Head of Research at Accendo Markets, says Tuesday’s soft start suggests that the recent momentum “has run its course and markets are in need of something else to get their teeth in to the drive us further north, or send us back south.”