The British pound continued to be weak against the other major currencies in the European session on Monday, as the country’s political crisis intensified and Scottish leaders pressed for a second independence referendum to remain in the European Union.
Scotland’s First Minister Nicola Sturgeon said on Sunday the country would do whatever it takes to remain in the European Union, including potentially blocking the legal process behind Britain’s exit from the bloc. Northern Ireland voters also expressed a preference for keeping Britain in the EU.
An online petition signed by more than three million people calling for a re-run of the Brexit referendum is being investigated after claims it has been hacked.
While senior EU politicians demanded quick U.K. exit from the bloc to avoid a period of uncertainty for the remaining 27 EU countries, Bank of England Governor Mark Carney stressed that there would be a period of uncertainty and adjustment following the EU referendum result.
International Monetary Fund Managing Director Christine Lagarde warned that negotiations on new arrangements with the EU and other trading partners could take years, leading to a protracted period of uncertainty.
Meanwhile, U.K. Chancellor George Osborne tried to calm the markets through his speech today saying that U.K. was ready to face the future “from a position of strength”.
He also said there would still need to be an “adjustment” in the U.K. economy, but added it was “perfectly sensible to wait for a new prime minister” before taking any such action.
In the Asian session today, the pound was trading lower against its major rivals.
In the European trading, the pound slid to more than a 2-year low of 0.8326 against the euro, from an early high of 0.8099. The pound may test support near the 0.84 region.
The pound fell to 1.3248 against the U.S. dollar, 134.86 against the yen and 1.2906 against the Swiss franc, from early highs of 1.3484, 137.82 and 1.3117, respectively. If the pound extends its downtrend, it is likely to find support around 1.32 against the greenback, 132.00 against the yen and 1.28 against the franc.
Looking ahead, U.S. advance goods trade balance for May and U.S. flash PMI report for June are due to be released in the New York session.
At 1:30 pm ET, European Central Bank President Mario Draghi will deliver opening remarks at the European Central Bank Forum, in Sintra.
The material has been provided by InstaForex Company – www.instaforex.com