The EU referendum is creating volatility for both Sterling and Euro and will likely continue up until the Referendum results.
After the UK economy and the Pound, it’s the EU and the single currency that are most exposed at the moment, and whilst GBPEUR exchange rates are unsurprisingly volatile I think exchange rates involving the Euro are likely to experience significant volatility next week also. Not only is the EU dealing with the potential for one of its only net contributors leaving the trading bloc, but there is also quite a hectic week on the cards for the Euro which is something they could have perhaps done without.
Later today the Swiss National Bank (SNB) will release its most recent Interest Rate Decision followed by a press conference, then an hour later Consumer Price Index figures for the month and year will be released.
Tomorrow there’s a speech from ECB President Mario Draghi which I certainly don’t expect to go unnoticed considering next week’s importance. Next week’s major events consist of German Producer Price Index figures on Monday, the ZEW (the Centre for European Economic Research) Survey Economic Sentiment report on Tuesday for both Germany and the Eurozone, both for June. The day before the vote see’s the Non-monetary policy’s ECB meeting and Targeted Long Term Refinancing Operation, with both having the potential to substantially move Euro paired exchange rates.
Recently company Director Tom Holian highlighted a potential outcome of the EU Referendum many seem to have overlooked. Many believe that should the UK vote to remain we can expect to see a sharp upwards spike in Sterling’s value, similar to the aftermath of the Scottish Referendum in 2014.
Tom highlighted that a vote to remain would be welcomed by Euro buyers also, and therefore it may be the Euro that actually moves upwards against the Pound, rather than vice versa. Those looking to avoid any unexpected outcomes may wish to contact their broker prior to the vote, and take advantage of what’s actually available as opposed to what might be.
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