The British pound is eyeing its biggest one-day drop of the year as the prospect of Theresa May’s ruling Conservatives falling short of a majority in parliament looks increasingly likely.
Down 1.44 per cent in the afternoon session in Asia at $1.2766, sterling is on track for its biggest one-day drop since last October. At its worst today, the pound was down 2 per cent at a roughly eight-week low.
But EU referendum day this is not. For those in need of a reminder of the gut-wrenching volatility, sterling closed a record 8.1 per cent lower on June 24 last year when the UK voted to leave the EU. At its worst on that day, the currency was down more than 11 per cent. The moves were bigger than Black Wednesday, on September 16 1992, that saw the pound down close 4 per cent lower when the government was forced to withdraw sterling from European Exchange Rate Mechanism.
To crack the pound’s 10-biggest one-day drops, sterling would need to close lower by 3 per cent or more.