Brexit EU Referendum update currencies

Currencies update

Sterling rises a few days before the EU referendum vote

The Brexit vote is scheduled for Thursday this week, and whether the UK votes to ‘Brexit’ or ‘Bremain’, the result will have a significant impact on global financial markets, with investors bracing themselves for change.

Sterling rose 1.7% on Monday as opinion polls ahead of the UK Referendum on whether to leave Europe showed the Remain campaign gaining ground. It has been speculated that the killing of pro-EU MP Jo Cox last week pushed public opinion back to the Remain side. Figures gathered by gambling website Betfair showed that the implied probability of a ‘remain’ vote in the referendum now sits at 72%, after falling to 60% last Thursday.

“The outcome of the referendum is wide open again,” said Ulrich Leuchtmann, currency strategist at Commerzbank. “But at least ‘Leave’ no longer seems the most likely scenario. Should the next polls suggest that the change of sentiment persists euro/sterling may ease further.”

Sterling rose 1.7% to $1.4604 against the dollar on Monday morning, and earlier climbed to $1.4625 – its highest rate in three weeks. Bloomberg reported that of the 16 major currencies it tracks, all but three have shown a jump in the cost to protect themselves against big declines as the referendum approaches. The pound saw the biggest rise, followed closely by other European countries as it was speculated that a vote to leave on Thursday would see other nations reconsidering their membership.

 

Across-the-board dip for the yen

The yen dipped across the board on Monday, ahead of the release of adjusted trade balance data, offering policymakers concerned about the currency’s strength some respite. Analysts forecast a surplus of 130 billion yen for May, exports down 10.4% year-on-year and imports dropping by 13.8% year-on-year.

 

A tough climb back from the US dollar

Meanwhile, the greenback is climbing its way back from Thursday’s two-year low, which it hit when the Bank of Japan held steady on policy and refused to give investors more stimulus. The euro gained 0.7% against the dollar to $1.1353. This helped to push down the dollar index by 0.6% to 93.589.

 

Written by Currencies Direct

Uploaded by Dominic Swinfield CEO LLNH

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