Sterling continues to rally against the Euro this week despite the EU referendum fast approaching. This morning's UK GDP figures will be closely watched.
Sterling gathered further momentum during yesterday’s trading session, as GBP/EUR breached 1.32, the highest point in almost four months. I feel that this is predominantly down to ‘Remain’ voters gathering pace and taking the lead in polls. The Telegraph polls have published that 55% will vote to stay in the EU, compared to 42% hoping to leave (with 3% undecided).
The Institute for Fiscal Studies also announced that if a Brexit were to occur, the UK could face an extra two years of austerity measures, with lower GDP growth and extra borrowing costs, causing Government losses of £20-40billion by 2020.
UKIP leader Nigel Farage was quick to criticise the IFS, claiming that it is biased because it receives funding from the EU, but this didn’t cause much of an impact on the Pound.
Although polls and bookmakers odds are looking more likely that the UK will remain in the EU, the current spike may not last for long and may be wise to take advantage of. The lead up to the Scottish referendum saw the Pound crash before the vote, and this Referendum could follow suit, so anyone with a currency requirement should keep in close contact with their broker throughout this volatile period.
This morning preliminary GDP figures for the first quarter of this year are released at 9.30am, and if this data shows poor performance we could see Sterling’s recent rally come under pressure. This key piece of economic data is keenly watched by Investors, and has the capacity to create large movements in a currency’s value.
In the early hours of tomorrow morning Consumer Confidence figures will give us a good idea of economic sentiment in the UK, and as this figure was at its lowest point last month since December 2014, it could potentially cause Sterling weakness if we see no improvement.
Thank you for reading my UK report today, a number of key economic releases for the remainder of the week for the UK, Eurozone and US have the potential to impact exchange rates and we therefore suggest you get in touch with one of our brokers to discuss further. Call our trading floor on 01494 725 353 or email me here for more information.
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