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Pound hits 2.5-year low against the Sing dollar

Amidst rising fears that the UK will leave the European Union (EU), the pound sterling dropped to a two-and-a-half year low against the Singapore dollar on Monday (22 Feb), after a prominent politician announced his support for Britain to exit from the 28-nation bloc, reported TODAYonline.

London Mayor Boris Johnson pledged to back the ‘Brexit’ campaign in opposition to Prime Minister David Cameron, who wants the country to remain within the EU.

“The fact that prominent members of the Conservative Party announced they will campaign for Britain to leave the EU likely underscored investors’ concerns that Brexit risks could increase,” said Valentin Marinov, Head of Group-of-10 currency strategy at Credit Agricole.

According to Bloomberg data, the pound fell to S$1.972 early Monday morning – the lowest level since 30 August 2013, when the exchange rate sank to S$1.9702. So far this year, the British currency has dropped by 5.5 percent against the Singapore dollar.

Its exchange rate versus the US dollar also declined to US$1.4067, the weakest since February 2009. This erased the gain made on Friday when Mr Cameron secured a deal on membership terms with EU leaders in Brussels.

Earlier this month, Goldman Sachs projected that the pound may slump to US$1.15 to US$1.20, the lowest levels last witnessed in 1985, if it leaves the EU. On the other hand, the currency may rise to US$1.60 by year-end if the UK remains a member, stated HSBC in a forecast last month.

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