27 October 2016
London Mayor Boris Johnson cycles off after speaking to the media in front of his home in London on Monday. Photo: Reuters
London Mayor Boris Johnson cycles off after speaking to the media in front of his home in London on Monday. Photo: Reuters

Pound tumbles on London mayor’s Brexit nod

The British pound posted its biggest one-day loss in almost six years on Monday on concerns of a possible British exit from the European Union.

The fall in the currency, as well as in government bond prices, was triggered by London Mayor Boris Johnson throwing his support behind the exit campaign, Reuters reported.

Prime Minister David Cameron, who has mounted a defense of his deal to keep the country in the bloc, has been bitterly disappointed by Johnson’s stance.

Johnson is one of the country’s most popular politicians and a senior figure in Cameron’s Conservative Party.

Johnson gave the “Brexit” camp a much-needed figurehead when he announced his support on Sunday, just days after Cameron struck his deal in Brussels to hand Britain what he called a “special status”.

Cameron, addressing parliament to champion the deal as a good basis for Britain to stay in the EU, faced criticism from lawmakers in his divided party and exchanged barbs with Johnson.

The stakes are high in the June 23 referendum.

A vote to leave would not only transform Britain’s future in world affairs but also shake the EU, which has struggled to maintain unity over migration and financial crises, by ripping away its second-largest economy and one of its main military powers, Reuters said.

Cameron called on politicians to campaign on what is best for Britain – in a veiled jab at Johnson, whose stance may be designed to attract widespread eurosceptic support among Conservatives in a bid to succeed Cameron, who has said he will step down before the next election in 2020.

“I am not standing for re-election, I have no other agenda than what is best for our country,” Cameron told a packed parliament.

“I am standing here telling you what I think, my responsibility as prime minister is to speak plainly about what I believe is right for our country and that is why I will do every day for the next four months.”

He added: “We are a great country and, whatever choice we make, we will still be great, but I believe the choice is between being an even greater Britain inside a reformed EU or a great leap into the unknown.”

Both sides in the debate argue Britain would be financially better off if their cause succeeds.

Johnson, London mayor since 2008, defended his stance by saying those who argued Britain would not thrive outside the 28-member bloc were the same people who wanted the country to make the “catastrophic mistake” of joining the euro single currency.

“There are people who don’t think that Britain could stand on her very own two feet and all the rest of it. I have to say I think that is profoundly wrong,” the 51-year-old told the London Assembly, the elected body which holds the mayor to account.

Showing how sensitive markets have become to the uncertainty over a possible Brexit, sterling fell as much as 2.3 percent on the day to hit a seven-year low of US$1.4057 in early U.S. trading – following Johnson’s Sunday announcement – before recovering by about 1 cent to around US$1.4165 by 1800 GMT (2 a.m. Tuesday in Hong Kong).

That still left it 1.7 percent down on the day – its biggest drop since the May 2010 elections that left Britain with a hung parliament.

Odds of a British exit rose to a 33 percent chance from about 29 percent after his announcement, according to bookmakers.

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