The pound dropped to seven-week lows against the U.S. dollar on Friday, as fears of a potential British exit from the European Union, or Brexit, continued to dampen demand for sterling, while upbeat U.S. consumer sentiment boosted the greenback.
GBP/USD hit 1.4324 during U.S. morning trade, the pair’s lowest since April 22; the pair subsequently consolidated at 1.4339, declining 0.84%.
Cable was likely to find support at 1.4349, the low of June 6 and a three-week low and resistance at 1.4527, Thursday’s high.
The pound came under selling pressure this week amid mounting fears of a potential Brexit victory at the U.K. referendum scheduled on June 23.
On Thursday, betting odds supplied by Betfair showed that the implied probability of a British vote to stay in the EU rose by at least two percentage points to 78%. Earlier in the week, betting odds indicated a 72% probability of an In vote.
Separately, according to a majority of analysts in a Reuters poll released on Wednesday, the recent slowdown in U.K. economic growth is largely due to uncertainty over the June 23 referendum.
Meanwhile, the greenback found support after the University of Michigan said, in a preliminary report, that its consumer sentiment index fell to 94.3 in June from 94.7 the previous month, compared to expectations for a decline to 94.0.
The positive data added to optimism over the strength of the economy after the U.S. Department of Labor said on Thursday that the number of individuals filing for initial jobless benefits in the week ending June 4 fell unexpectedly to 264,000.
The reports came after Federal Reserve Chair Janet Yellen said on Monday that interest rates won’t rise until uncertainty over the economic outlook is resolved.
Sterling was also lower against the euro, with EUR/GBP climbing 0.66% to 0.7882.