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Sterling plunges to near 7-year low against dollar on Brexit fears

[LONDON] The pound sterling plunged to a near seven-year low against the dollar in Monday trading on concerns about the possibility of Britain voting to leave the European Union in a June referendum.

The pound fell to $1.4058 in early afternoon, its lowest level since March 2009, after the popular Mayor of London Boris Johnson on Sunday threw his weight behind the campaign for Brexit.

It later recovered somewhat to $1.4127 at around 1510 GMT, compared to $1.4392 late on Friday.

The pound was also under pressure against the euro, falling to 77.98 pence to the euro at around 1510 GMT compared to 77.35 pence on Friday.

The charismatic Johnson, an MP from Prime Minister David Cameron's own Conservative Party, on Sunday said he would campaign for Britain to leave the EU in the June 23 vote.

"The British pound was sent reeling after popular London Mayer Boris Johnson backed the campaign for Britain to leave the EU," said Jasper Lawler from currency trader CMC Markets.

"Boris is one of the few British politicians liked by the British public and is a significant coup for the 'Out' campaign. The odds of a Brexit has shifted a few percentage points with Boris on the 'out' side," he said.

Simon Smith, chief economist at FxPro, said: "With yesterday showing the influential London Mayor... coming out in favour of the UK leaving, then sterling took a more bearish view." "For sterling... this won't be a fun time and it's more the uncertainty that will weigh on the currency, rather than investors taking a view on the outcome and the implications for the economy."


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