With only one week to go until the EU referendum, how will the recent change in polls affect exchange rates as we approach the 23rd? Sterling has lost ground and could continue to do so if the leave camp continue to build momentum. We recommend you visit our live exchange rates page during the Referendum as exchange rates may fluctuate significantly.

Will the anticipated Sterling weakness finally arrive next week?

The regular readers of our morning reports will be aware of the increased volatility currently being experienced by Sterling exchange rates, just earlier this week our head of affiliate partnerships Rob Harold highlighted just how volatile trading conditions are becoming, with the Thomson Reuters volatility index (a key measure of investor uncertainty) hitting levels not seen since the global financial crisis in 2008.

Fears over the UK economy moving forward are understandable, as a week today the UK public will vote on whether they wish for the UK to remain part of the EU or not. With political uncertainty being one of the key drivers of currency weakness, up there with acts of God such as natural disasters, many have been expecting the Pound to be in a weaker position this close to the vote than it actually is.

We have seen a slight sell off in Sterling, predominantly off the back of the most recent prominent polls suggesting that the ‘Leave’ campaigns have been picking up steam as the key date (June the 23rd) approaches. The most read tabloid newspaper in the UK, The Sun, added fuel to the fire earlier this week with the front page headline ‘BeLeave in Britain’.

With such popular media sources along with some of the most relevant voices in UK business such as Sir James Dyson, the inventor most famous for designing the first bagless vacuum cleaner, and Lord Anthony Bamford, the owner of JCB which is one of the UK’s leading manufacturers, now publically offering their support to the ‘Leave’ campaigns, the wheels are now in motion for a UK exit and the polls reflect this, hence the dropping GBP exchange rates even if they’re not as low as many had thought they would be at this stage.

EU Referendum inevitably next week’s major event

Personally, I’m expecting GBP exchange rates to be trading at lower levels than where they currently are on the day of the Referendum. Important economic events that could affect rates between now and then are todays Bank of England Interest Rate Decision and subsequent Minutes Speech, and then next Tuesday the UK’s Public Sector Net Borrowing figure for May which will be released at 9.30am. The outcome of the election is likely to be announced in the early hours of next Friday.

Is the Referendum affecting your exchange requirements? Get in touch with us today to find out what we can do to help you during this volatile period. Call our trading floor on 01494 725 353 or jxw@currencies.co.uk.


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