Recent polls show shifts towards a leave which has impacted Sterling in recent days. If you have requirements for currency there are contract options that could safeguard you in the event of a Brexit.
The Brexit scenario has never felt more real as we approach the finish line and the impact it’s having on the exchange is noticeable. A number of recent polls from The Telegraph, YouGOV and ICM point towards a 5-point lead for the out camp. Bookies have tightened their odds of a Brexit since May from 19% to 30% and as expected, Sterling has lost over 5 cents against the Euro in a matter of days.
We must also consider that leave voters are likely to be more passionate about the outcome of the referendum. Even if the stay camp has the majority according to the polls, it’s the turnout on the day that counts and I am of the opinion that the leave camp will follow suit.
If we look at the impact the polls are having on Sterling prior to the results, it’s difficult to conclude that a Brexit scenario will have positive implications for the currency. A 5 Cent move for GBP/EUR rates has already been witnessed this week, imagine what could happen once the results come to light?
This trend can be witnessed across a number of major currencies and I can only envisage that this will continue as we draw closer to the 23rd.
With so much uncertainty ahead this month, a forward contract could be a suitable option.
GBPEUR exchange rates are still trading above the 10-year average at 1.27 and although not as attracted as the 1.30’s we were seeing last week; I am of the opinion that securing these rates now could save you in the event a Brexit materialises.
A forward contract would allow you to freeze existing rates for up to 18 months giving you peace of mind that if the UK were to leave the EU, you would not be victim to any potential Sterling weakness.
Speak to your broker today to find out more, it is strongly recommended you do so sooner rather than later as I fear further Sterling weakness is on the horizon.
Get in touch with your broker today to secure current exchange rates prior to the referendum deadline. Call our trading floor on 01494 725 353 for more information.
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