Sterling is getting crushed once again on Thursday, as currency traders react to ever increasing odds that the UK will vote to leave the European Union as well as renewed warnings from the Bank of England about the dangers of Brexit.
Around 3:45 p.m. BST (10:45 a.m. ET) the pound is lower by around 1.37% against the dollar to trade at $1.4014, having tumbled steadily for around two hours in the early afternoon, as Brexit jitters intensify in the markets. Here is a look at how sterling is performing so far on the day:
The big driver of Thursday’s sterling fall looks to be the release of several polls showing that the Brexit camp is continuing its surge in support. Polls from both Survation and Ipsos Mori showed big swings towards the Leave campaign.
Also pushing the pound lower is the renewed warning from the Bank of England about the potentially massive impacts of Brexit on the UK and world economies. In the minutes of the central bank’s June Monetary Policy Committee meeting, the bank said it expects Brexit to “lead to a materially lower path for growth and a notably higher path for inflation.”
While sterling is currently getting slammed, it is also incredibly volatile, with one-month sterling volatility – a measure of how much the British pound is expected to fluctuate in the coming month – hitting its highest level of all-time on Monday, soaring to 26%, more than the previous all-time high of around 25%, reached during the global financial crisis.
It is expected that should Britain choose to back Brexit, the pound would crash, potentially dropping to its lowest level in more than 30 years, according to a survey of economists released by Bloomberg on Monday. Late on Wednesday Goldman Sachs warned that sterling may fall as much as 11% after a Brexit.