With just under 4 months to go until the UK decides whether it wishes to remain a part of the European Union, the current week has seen a flurry of UK Referendum activity on both sides of the divide. All the upheaval has had a significant impact on Pound Sterling (GBP) exchange rates, with GBP/EUR, GBP/AUD and GBP/NZD all falling to multi-month lows. The GBP/USD exchange rate also dropped to its worst rate in seven years.
The catalyst for the current bout of uncertainty actually came at the end of last week, when Prime Minister David Cameron finally managed to reach an agreement with EU leaders regarding the renegotiation of the UK’s membership at a summit on Friday. Shortly after news of a successful conclusion was announced, the PM set the date for the vote to take place as June 23rd.
UK Confidence and Pound Sterling (GBP) Sentiment Crashes on Monday – Et Tu, Boris?
With a timeline now clearly established, MPs were quick to either announce their alignment with the ‘In’ or ‘Out’ campaign, or otherwise start campaigning properly for their chosen group. One of the most astonishing announcements came on Monday, when Conservative MP and Mayor of London Boris Johnson announced that he would be campaigning for the UK to leave the EU.
Many pollsters consider Johnson to be the second-most influential politician in the UK (behind the PM), so the stage was clearly set for a clash of the titans in the House of Commons. The Pound Sterling (GBP) exchange rate dived on the news and took until the end of the week to start recovering from such an apparent threat to the UK’s economic prospects.
Tensions Escalate on Tuesday – ‘Brexit’ or Bust for Boris Johnson?
After the PM rallied his forces and essentially pointed the finger of suspicion at Johnson in the House of Commons on Monday, the Pound recovered marginally. The weight of the argument was that Johnson was covertly seeking to lead the Conservatives after Cameron departed, which went some way to deflate the previously-buoyant ‘Out’ campaign’s hopes.
The ‘In’ campaign got another boost when the heads of a number of major UK businesses, including M&S and BT, signed a letter supporting their efforts; the letter warned that leaving the EU could see foreign investment in the UK dry up.
However, the Pound Sterling to Euro (GBP/EUR) exchange rate still remained trending in the region of a 14-month low.
EU Membership Reforms in Focus on Wednesday – Justice Secretary Takes a Swing
Wednesday opened on a strong challenge to the PM’s claims that UK-EU legislation reforms would be legally binding, with Justice Secretary Michael Gove arguing the opposite. Although supporting the ‘Out’ campaign, Gove attempted to remain on the fence by stating that the EU was not guaranteed to throw out any law changes, but that on a technical basis, they could.
Such indecision was quickly picked up on by Attorney General Jeremy Wright, who gave the assurance that a deal could not be changed; this attitude was shared by UK and EU lawyers.
Further support for the UK-EU union came when 12 of the UK’s former defence chiefs put across the case that the UK was better secured against external threats within the EU rather than outside of it.
Thursday – Hester and Owen have Their Say
Thursday was relatively quiet in terms of referendum news; the Pound Sterling to Euro (GBP/EUR) and US Dollar (GBP/USD) exchange rates remained close to recent lows while former Labour Foreign Secretary Lord Owen claimed that leaving the EU would give the UK a fresh start. Countering this was a statement from RSA Chief Executive Stephen Hester, who said that ‘A level playing field between European competitors and ourselves is valuable to us in the long run’.
EU Deemed ‘Outdated’ on Friday – Howard and Osborne Clash over Timing of Potential ‘Brexit’
The most notable story out today has been the division within the present and past Conservative Party; former party leader Michael Howard has criticised the EU for being ‘outdated’ and ‘flawed’ and has argued that now is the time to cut ties with the grand European project.
On the other hand, Chancellor George Osborne has remained an active participant in the debate despite being across the world in Shanghai, stating that this is the ‘very worst time’ for the UK to even consider leaving the EU and that a ‘Brexit’ vote would be an ‘enormous economic gamble’.
That’s it for the UK Referendum roundup so far today, but we’ll be back next week with all the latest UK-EU news to keep you up to speed with the situation as it unfolds. In the meantime, why not take a look at our predictions for what a ‘Brexit’ situation might mean for you.
The Pound Sterling to Euro (GBP/EUR) exchange rate was trending in the region of 1.2697 and the Euro to Pound Sterling (EUR/GBP) exchange rate was trending in the region of 0.7878 today.