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British pound drops as Brexit support grows

The British pound fell steeply on Monday after two separate surveys showed public support for an exit from the European Union was rising.

Polls released Monday show a majority of decided voters want to leave the EU

The British pound is increasingly volatile ahead of the 'Brexit' vote over whether to leave the European Union. It fell sharply Monday as polls showed the Leave side ahead. (Reuters)

The British pound fell steeply on Monday after two separate surveys showed public support for an exit from the European Union was rising.

The pound dropped 1.5 cents against the U.S. dollar to $1.4351 and 1.44 cents against the Canadian dollar to $1.8532.

The Canadian dollar has been strengthening along with the price of oil and was up more than three-quarters of a cent at on Monday to 78.09 cents US.

The British currency, which has been vulnerable to the angry rhetoric surrounding the Brexit debate, was at a three-week low.

The Bank of England said in its May inflation report that the currency was already lower because of the threat of Brexit.

"There is evidence that a material proportion of the nine per cent fall in sterling exchange rate since its peak in November could reflect referendum effects," the report said.

Financial analysts say a vote to leave the EU could be a heavy blow to the currency.

Paul Hollingsworth, an economist at Capital Economics estimates the pound could fall by 10 to 20 per cent.

Support for Brexit growing

A YouGov poll of 3,495 released Monday found 45 per cent of voters favoured Britain leaving the EU and just 41 per cent wanted to stay.

A separate ICM poll of 1,741 people found 48 per cent would vote to leave.

The formal vote is less than three weeks away, but public opinion polls until now have been mixed.

The Bank of England has said  it would inject money into the banking system to allay any currency shortages following the referendum result.

Its governor Mark Carney has warned leaving the EU would hurt Britain's economy, but currently the central bank is not commenting on Brexit, or other economic issues, as government departments refrain from making announcements ahead of any election.

Chief Brexit advocate Boris Johnson has said the pound may move down in the short term, but in the longer term he expects fantastic success for the British economy outside the EU, strengthening the currency.

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