Pound Sterling rallies against a number of major currencies during yesterday's trading day, despite recent polls highlighting a potential leave outcome.
Yesterday the Pound made gains against most of the major currencies throughout the trading day. With limited data releases and no polls released I put the shift down to speculative trading. Furthermore with the Pound losing momentum over the last week it makes sense for investors (if they believe the UK will remain part of the EU) to buy a cheaper pound as rates are expected to rise if the UK remain part of the EU and therefore they would make profit.
In recent weeks Sterling exchange rates have followed the trend of polling stations. At the end of May GBPEUR was at a 2 month high and GBPUSD at a 5 month high. At this stage polls were suggesting the remain camp were up 55% to 37% with 8% undecided. However in recent weeks polls are suggesting it’s not a one horse race with remain at 48% and leave at 43%. Due to the change in sentiment GBPEUR and GBPUSD have fallen 4 and 3 cents retrospectively.
Last night UK Prime Minister and UKIP leader Nigel Farage debated live on ITV the benefits of leaving and staying part of the European Union. As we would have guessed the Prime Minister emphasised how the UK would struggle economically for many years if the UK were to leave the EU and Nigel Farage’s main point was immigration is ruining the UK and that’s the reason we should exit. The next TV debate is this Thursday with former Mayor of London Boris Johnson and Nicola Sturgeon from the SNP Scottish National Party.
If you are buying a foreign currency before June 23rd I believe the volatility the referendum is causing will continue to weigh down on the Pound therefore trading sooner rather than later may be wise.
Many of my clients have asked what could happen after the decision on June 23rd. If the UK were to remain part of the EU the general consensus within this industry is that sterling will make considerable gains against all of the major currencies. However if the UK were to vote to leave I don’t believe it’s going to be that simple. If the vote is close I believe David Cameron will go back to the European Union and try to renegotiate the immigration policy and therefore the UK could hold a 2nd referendum. On the other hand it could be the case that if there are enough MPs that disagree with the decision it could be overturned to benefit the UK economy. Either way if the UK vote to leave I would be surprised to see the UK start the exit process straight away.
Today the UK release their latest Manufacturing and Industrial production numbers. Manufacturing and Industrial production are close to 2 year lows and with investors holding off due to the EU referendum only 15 days away I expect the numbers to be released worse than expected. If this is the case the Pound could lose value this morning.
Thank you for reading my report today, with the upcoming referendum, Sterling may become vulnerable to fluctuations in the market. Speak to your broker sooner rather than later in the event you have Euros to buy. Call us on 01494 725 353 or email me here for more information.
First rate service from Dayle Littlejohn in dealing with our transaction from Cyprus. He kept us updated at all times and we appreciated his sincere manner.
First class foreign currency provider, great rates and outstanding customer service.
Great service very professional but with a personal touch. Everything went smoothly with no fuss. Would highly recommend.