Investing.com - The pound fell to three week lows against the dollar on Monday and weakened against the euro after London Mayor Boris Johnson’s shock decision to back a campaign for Britain to exit the European Union.
GBP/USD hit lows of 1.4176, the lowest since January 29 and was last at 1.4203, off 1.4% for the day.
British Prime Minister David Cameron reached a deal with EU leaders on Friday giving Britain a special status in the bloc, which paved the way for him to call a referendum on EU membership on June 23.
But on Sunday London’s Mayor Boris Johnson said he would be supporting the campaign to leave, arguing it is a chance "to vote for real change".
The move is being seen as a significant blow to the prime minister’s campaign to remain in the EU.
David Cameron was to present his argument for the U.K. remaining within a reformed EU to MPs later in the day.
Sterling was also down more than 1% against the euro and the yen.
EUR/GBP hit highs of 0.7769 before pulling back to 0.7806, still up 1.02% for the day and GBP/JPY fell as low as 160.00, before recovering slightly to trade at 160.4.
The euro pared back gains after data showing that French private sector activity slid into contraction territory last month, while business activity in Germany grew at the slowest pace in seven months.
The data added to pressure on the European Central Bank to step up measures to bolster growth in the region.
The U.S. dollar index, which measures the greenback’s strength against a trade-weighted basket of six major currencies, was up 0.43% at 97.04.
Demand for the dollar continued to be underpinned after data on Friday showing that U.S. core inflation rose at the fastest rate in four years in January underlined expectations for further interest rates hikes by the Federal Reserve this year.