Sterling hits lowest point in eight weeks as Brexit looms
Sterling fell sharply again yesterday (Monday) as currency markets remain volatile in the face of a looming UK vote on its membership of the EU.
In trading on Monday, Sterling took another hit with the release of ICM Unlimited’s latest poll results that confirm the Leave vote is pulling ahead in the EU referendum campaign.
- Pound to euro exchange rate today = 1.26
- Euro to pound exchange rate today = 0.79
According to the latest poll, leave now enjoys a 53%-47% advantage once ‘don’t knows’ are excluded, this compares with a 52%-48% split reported by ICM a fortnight ago.
The Financial Times’ Poll of Polls meanwhile shows ‘Leave’ enjoy an advantage of 46% to ‘Remains’ 44%.
The prospect of a UK vote to leave the European Union presents potentially highly significant challenges for Ireland.
A number of analysts have suggested that a UK vote to leave the EU on June 23 would send sterling tumbling by as much as 15-20%.
The UK is by far the largest trading partner for Ireland. According to the Central Statistics Office, in 2015 Ireland exported almost €5.1 billion worth of agricultural products and our imports from the UK were worth €3.8 billion.
However, the immediate impact of a Brexit obviously would mean a dramatic reduction in the value of the pound.
The strength of the British pound had driven strong prices at a time when prices have been quite weak in the rest of Europe, particularly in respect of beef last year.
Consequently, with half of its beef exports going there, the UK is Ireland’s biggest beef market by far. If the pound is strong, it makes us highly price-competitive.
However, were the pound to weaken dramatically, as it undoubtedly would were the United Kingdom to decide to leave, Ireland would have competitiveness problems with both beef and dairy prices.