Sterling Ends Week as Biggest Loser due to Brexit Fears

The main theme on the currency markets last week was a potential exit of Great Britain from the European Union. Obviously, this led to weakness of the sterling, which has ended the week as the biggest loser among major currencies, though the euro was not immune as well.

The start of the week has set the stage for the pound’s drop to multi year lows as the referendum for leaving the EU was announced and the mayor of London stated that he favors the exit. The news has ensured weakness of the sterling throughout the whole week despite feeble attempts to bounce. Fears of the so-called Brexit spilled over onto the euro as the potential exit of the United Kingdom from the EU could endanger the whole union and therefore the eurozone.

Another important theme was the relatively decent performance of crude oil and the resulting risk-positive sentiment among traders. It supported commodity currencies, particularly the Canadian dollar.

GBP/USD sank 3.4% from 1.4269 to 1.3864 — the lowest weekly settlement since January 2009. EUR/GBP rallied 1.8% from 0.7782 to 0.7890. GBP/JPY slid from 160.59 to 157.96, and it weekly low of 154.70 was the lowest since September 2013.

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