Daily Management Review

Speculations Of Bremain Makes The Pound Soar Against Dollar


06/23/2016


In the hope of Britain retaining the EU membership, pound jumps up to the top, while the opposite result may bring the same crashing downward.



On Thursday, 23rd June 2016, pound reached the highest figure over last six months performance in comparison to “US dollar”. The said position of pound underpinned the expectations of the investors that the voters in Britain would “opt to remain in the European Union at Thursday’s referendum”, even though the pre-voting polls show a very close fight among both the parties.
 
As per a survey conducted by Opinium showed “45% to 44%” lead for “Leave campaign”. On the other hand a TNS poll also showed 43% support on Brexit while only 41% was with Remain camp. However:
“...a ComRes survey for the Daily Mail and ITV News put Remain on 48% and Leave on 42%. Excluding undecided voters, it found remain leading Leave by 54% to 46%. Meanwhile, a YouGov poll gave Remain a two-point cushion, ahead of leave by 51% to 49%.”
 
Irrespective of the “split polls” the pound revived suggesting investors’ hope of “a vote for the status quo”. Meanwhile, Sterling also peaked at its highest “against the US dollar in six months in Asian trading, at $1.4844”. In the words of the Chief Market Strategist at FXTM, Hussein Sayed:
“Although most recent polls swayed toward the Remain camp in the last couple of days, the lead is still very narrow, which doesn’t explain the surge in pound.
“However, the markets are being completely reliant on the predictions from the bookies, which strongly expect Remain to win the referendum. If history is any indication, the bookmakers will get it right. They got it right on the general election last year, and on the Scottish referendum in September 2014, which made them a more reliable source than the polls.”
 
Sayed also points out that in case Britain decides to quit EU, the impact of it is “likely be ‘disastrous’”, while Citigroup informed that in case Brexit turns out to be a reality then pound would be pushed down by fifteen percent. Moreover, the “Strategists at Societe Generale” said:
“Given the scale of the UK current account deficit (5.2% of GDP) and possible BoE response (rate cut?), don’t rule out a disorderly fall in the coming days/weeks of GBP/USD below 1.30 and rise in EUR/GBP over 0.85”.
“Currency markets and bookmakers are confident that the Remain vote will prevail (backing of two polls overnight), and investors have jumped the gun by bidding up GBP and stocks after polls turned in favour of the Remain camp last weekend. However, don’t underestimate the sheer number of undecided voters and the impact this could have.”
 
 
 
 
 
 
References:
http://www.digitallook.com/







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