With only 3 days to go until the Referendum Pound Sterling has held ground this weekend. The polls still suggest the race is tight and the results could swing either way. You can view exchange rates at any time from our live exchange rates page.
As we enter into the last 85 hours before the polling stations open all eyes remain tightly fixed on the UK referendum on its membership of the EU. Following all the political campaigns, assumptions and accusations the UK population will make what fundamentally is the binary choice: in or out. What is clear however is that the result of this decision has the potential to have a long standing impact on Europe as we know it and the currency markets.
Between now and the event we expect to see movement being driven by the changing polls on the vote, GBP/EUR have already fallen by over 4% since early June to around 1.26.
The latest poll was conducted by the Financial Times and suggests a swing towards the Leave campaign; that being even as the The Bank of England warned again on the potential of a BREXIT and the ramifications on the global economy. It seems that big economic decisions are already being delayed by the uncertainty over the vote. Book makers odds, which have traditionally been more accurate to forecast than that of the polls, show about two-thirds probability of ‘remain’, down from 85% in late May.
The official results are not expected until early Friday, but local result are expected from around 4 am, here we will be contactable from 7 am so if you would like live updates before the traditional 9 am threshold please do contact us.
If we were to see a ‘Remain’ result the view is that levels will climb for the Pound, as high as 1.40 has been suggested however 1.35 may well be more realistic.
If however a ‘Leave’ result is seen expect some significant losses for the Pound. Some have said 1:1 however a drop of over 10 cents seems likely within a very quick period of time. Remembering that it is not just the economic uncertainty that will follow but also the political as the future of David Cameron as Prime Minster is widely expected to be linked to this result. It may be that we have a snap leadership election before Christmas which would only add to further Pound losses.
Longer term, within a 2-3 week period if there is a ‘Leave’ result it is more challenging to forecast. Some are suggesting that the Pound will continue to fall as demand continues to weaken. Others are suggesting that the UK leaving the EU could weaken the EURO meaning there could be a recovery for GBPEUR in the medium term. The argument being that other member states could start taking stepping stones to follow the UK out of the single market. Frankly, leaving is a massive unknown and no one can suggest with any certainty what will follow.
If you would like to stay updated on the market as it happens make sure to contact your broker to register your interest.
Do you have a currency requirement? Arranging a transfer before the EU referendum may be a solution in the event the UK vote to leave the EU. Call our trading floor on 01494 725 353 or email me here for more information.
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