See EU later

3 June, 2016

Matthew Boyle

This week has seen a change of fortune for the pound following the polls showing that the Brexit vs. IN camps are a lot closer than first thought. On Tuesday Guardian and ICM polls showed that the sentiment had shifted from what was an 18point swing in favour of “in” to now what seems much closer – only a 4 point lead. As a result of this GBP lost ground across the board following fears of Brexit which was exacerbated against the Dollar posting strong data on Thursday and ahead of a potential rate hike this month.

Yesterday was fairly quiet in the way of data with both the UK and Europe posting less than expected PPI figures in the morning. Near midday as expected the ECB announced there would be no change to the interest or deposit rate remaining at 0% and -0.4% respectively and so GBP>EUR remained relatively flat throughout the morning. Just after midday the US showed an increase in unemployment which did see USD suffer, however interestingly against GBP by the end of the day it closed at the same level it opened and had gained back its losses.

The afternoon was the main focus of the day with the ECB President Mario Draghi providing their monetary policy and statement, and BoE Governor Mark Carneys speech. Draghi announced that for the time being no further measures would be taken as they wait for the last round of stimulus taken in March to take effect following a poorer than expected Q1 growth figure for the Eurozone. As such and coupled with the gains made against GBP over the past few days GBP>EUR gained nearly half a cent in the afternoons trading. Perhaps also aided by Carney who has more than vocally supported the “in” campaign, something that has been widely criticised by the Brexit camp. EUR>USD dropped over half a cent throughout the day, perhaps little surprise given the current USD strength and lack of action by the ECB amidst poor ecostats.

Today could be another big one for the Greenback as it takes centre stage, releasing unemployment data and the all important non-farm payrolls. Certainly one to watch given its recent gains and hints by the FOMC and FED of a rate hike later this month.

Whilst there are various releases from the Eurozone including retail sales, as we have seen sentiment at present is easily outweighing data with GBP/EUR at its most volatile since 2009. As such it is largely the polls that will cause movements in this pairing. With the Brexit camp starting to gain traction and close the gap in the polls are we heading now back towards the 1.20? With it being so close and extremely volatile any readers with upcoming requirements would be well advised to stay in close contact with you Currency Index account manager.

It is also worth noting that we can provide stop and limit orders which can help safeguard your requirement come the 23rd should we see a huge movement in rates to prevent you from being caught out.

Give us a call today for some friendly and professional guidance on how to get the most out of your transfer.