Sterling tumbles as Brexit risk rises after Brussels attacks

Sterling lost more than 1 percent against the US dollar after tumbling on news of the terrorist attacks in Brussels on Tuesday. By Wednesday, the pound slid to a six-day low of $1.4191. It also weakened by around 1 percent against the euro, to 79.05 pence.

The events in Brussels may now increase Brexit risk as it may boost the “leave” campaign to take Britain out of the European Union. Immigration, refugees, border controls and sovereignty issues are all key points in the Brexit debate. Some advocates of a Brexit claimed the EU’s open border policy had allowed the attacks on Brussels’ main airport and a rush-hour metro train to take place. A poll last week showing the “Out” campaign inching in front also led to a sharp dip in the pound.

Meanwhile, political tension in the Conservative Party after a minister resigned over the weekend also factors in the Brexit case.

Also weighing on the British pound were some UK economic data on Tuesday which showed inflation numbers coming in slightly below forecast and still close to zero in both annual and monthly terms.

A warning from ratings agency Moody’s on the outlook for the country’s public finances added to concerns about last week’s budget, attacked over the weekend by members of the ruling Conservatives for its “unfair” cuts to welfare.

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