Finance Finance News AUD jumps as British pound plunges

AUD jumps as British pound plunges

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The British pound sterling has posted its biggest one-day fall in six years, spiralling after London’s mayor Boris Johnson and other senior ruling Conservatives voiced their support to leave the EU, raising the odds Britain will exit the bloc.

The Australian dollar jumped to a nine-month high of 51.1 pence on the news, as investors sold out of the pence sending it to its lowest point in seven years.

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Prime Minister David Cameron has called for an in-out referendum on Britain’s EU membership for June 23.

Chief market analyst at CMC Markets in the UK, Michael Hewson, told NewsRadio there is still a lot of uncertainty.

“There’s still no guarantee that the UK will exit the European Union, but I think what it has done is it has highlighted the uncertainty not only here in the UK about the future of the EU, because the euro has also taken a bit of a hit, but also in the global economy as a whole,” he said.

Against a basket of currencies, the Australian dollar rallied to buy 72.3 US cents, 81.7 Japanese yen, 65.6 euro cents, and $NZ1.078.

In New York Wall Street jumped higher, with the Dow Jones gaining 1.4 per cent to 16,221.

A surge in oil and commodity prices boosted the US share market, coming on the back of better-than-expected US jobs and inflation data.

The Nasdaq tacked on 1.5 per cent to 4,571, while the S&P 500 climbed 1.5 per cent to 1,946.

West Texas crude bounced 6.2 per cent to $US31.48 a barrel, while iron ore jumped 7 per cent to more than $US50 a tonne.

Overnight, in London the FTSE 100 gained 1.5 per cent to 6,038, the German DAX leapt 2 per cent to 9,574, while France’s CAC 40 rallied 1.8 per cent to 4,299.

Locally, shares were set to follow overseas leads higher, with the ASX SPI 200 up 0.8 per cent to 5,000.

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