This week has seen a mix of EU Referendum stories come out, some of which have had a major influence on the Pound’s exchange rate with the Euro and others that have been more minimal in their impact.
Sterling has managed to perform extremely well against the Euro over the course of the week, having started at 1.2678 and moved up to 1.3014 towards the end of the five trading days.
Monday: GBP/EUR Fluctuates on Johnson’s ‘Hitler’ Comments and Three-Party ‘Remain’ Supporting Speech
This week began on a controversial footing, after the Telegraph printed an interview with former London Mayor and ‘Leave’ campaigner Boris Johnson, in which he compared attempted European unification by the EU to the dictatorial policies of Napoleon and Hitler. Johnson reinforced his fiery remarks by saying ‘there is no underlying loyalty to the idea of Europe’.
The other big piece of news to open the week’s debating came on the ‘Remain’ side, when Chancellor George Osborne spoke alongside former Labour and Lib Dem rivals Ed Balls and Vince Cable in favour of the EU, with all three men stating that a ‘Brexit’ would be a ‘one way ticket to a poorer Britain’.
In other news, details emerged that an ‘impartial’ guide to the Referendum would be coming to households in the coming weeks, Bank of England (BoE) Governor Mark Carney defended his apparent intervention in the debate last Thursday and the PM warned that the poorest would be harmed the most by a ‘Brexit’.
Pound Sterling Uncertain on Tuesday as Johnson and UKIP Attacked for Hitler Comments and ‘Neverendum’ Plans
The Referendum bitterness was in full swing on Tuesday, when verbal assaults were made against a number of aspects and individuals that have been present in the debates.
Responding to the previous inflammatory remarks made by Johnson, former Conservative Deputy-Prime Minister Lord Heseltine claimed that the former Mayor’s ‘judgement [was] going’ and that Johnson’s supposed ulterior motive of leading the Conservative party and perhaps the nation was slipping away rapidly due to his repeatedly controversial stances.
Another source of uncertainty for Pound investors regarding June 23rd and its aftermath was the statement from UKIP leader Nigel Farage that a second referendum could be called for if the ‘Remain’ vote won by a narrow margin. This stance was similarly adopted by Boris Johnson, although under more nebulous conditions. The PM quickly refuted the claims, stating that the incoming vote was a ‘once in a lifetime’ occurrence.
Johnson also turned his attention to the numerous letters of support that business leaders had put forward for the ‘In’ vote, accusing the PM of a ‘stitch-up’.
Elsewhere in the day’s developments, it emerged that phone polling was more likely to yield ‘Remain’ supportive results, while online polling had a greater ‘Leave’ bias, although experts were unsure of why this was. European Council President Donald Tusk warned that a ‘Brexit’ would bring ‘chaos’, while Shadow Chancellor John McDonnel criticised both sides of the campaign for being excessively negative in their outlooks and interactions with opposing groups.
Finally, Microsoft published a statement that was ostensibly neutral, but ultimately favoured an ‘In’ vote, while a poll from international student recruiting company Hobsons showed that over half of its surveyed potential students would be less likely to study in the UK if it left the EU.
The Pound made unusual movements against the Euro on Tuesday, rising against the single currency and others despite national inflation for April being decidedly poor.
Pound Sterling Sent Soaring by Strong ‘Remain’ Polling Result on Wednesday, Queen’s Speech Found Lacking
The middle of the week brought a massive boost to the appeal of the Pound, which was sent skywards by an Ipsos Mori poll that recorded over 55% of surveyed voters as supporting an ‘In’ vote compared to support of 37% for a ‘Leave’ outcome. While an independently-sourced poll put a far narrower gap between the two campaigns (at 43% for Remain and 40.5% for Leave), it was plain which data investors decided to pay attention to.
The other big news was the Queen’s speech at the State Opening of Parliament, which indirectly brought the influence of ‘Brexit’ uncertainties into focus.
While Her Majesty did speak on a number of pressing issues affecting the UK, such as prison reform and infrastructure improvements, notably absent or lacking were a number of Referendum-dependent bills, such as one regarding the preservation of national sovereignty.
Closing off the day’s Referendum news were comments from ‘Out’ supporter Iain Duncan Smith, who called Lord Heseltine a ‘voice from the past’ in defence of Johnson’s divisive campaigning strategies.
The Pound’s gains against the Euro were extraordinary on Wednesday, with with the GBP/EUR pairing rising from 1.2787 to end the day in the region of 1.3009.
NY Mayor, Fujitsu and Estate Agents Entered Debate amid Accusations of EU Referendum ‘Smear Campaign’ on Thursday
Yesterday brought a relatively limited amount of EU Referendum news, though it was diverse in its points of origin.
The former Mayor of New York Michael Bloomberg voiced his concerns over the implications of an ‘Out’ vote, asking ‘a vote to leave is a risk…is the risk worth taking?’
The Chairman of Fujitsu, Masami Yamamoto, also warned against a ‘Leave’ decision, stating that investment in the UK by his company could be reduced or at least delayed due to increased need for analysis of risks in a post-‘Brexit’ situation.
The National Association of Estate Agents (NAEA) and Association of Residential Letting Agents (ARLA) gave forecasts for what a ‘Brexit’ could mean for rent and property prices yesterday, with expectations being for lower rent but also lower house prices if the UK left the EU. The predictions were a double-edged sword, however, as it was also estimated that financial damage to the construction industry post-exit would likely limit the number of new houses built.
Finally, ‘Out’ campaigner Stephen Baker claimed that the ‘Leave’ campaign was the victim of a smear campaign from tabloids and the government itself; these claims were immediately denied by a spokesperson for Downing Street.
GBP Weakened on Friday on BoE Referendum Warning, Ryanair ‘Brexit’ Campaign
The Bank of England (BoE) had previously warned that a ‘Brexit’ may create the need for further monetary easing, but Sterling weakened on Friday on the suggestion that a cut could come regardless of the outcome of the vote. BoE policymaker Jan Vlieghe commented that:
‘The challenge for the committee is that we do not know how much of the slowing in growth is due to the referendum, an effect that should be short lived, and how much of it reflects a more fundamental loss of underlying momentum, which might be more persistent.’
Meanwhile, it emerged that the police were investigating a complaint made by the ‘Leave’ campaign after Ryanair offered a ‘Brexit special’, offering cheap flights to allow expats who are eligible to vote to ‘fly home to vote ‘Remain’’ for a cut price. While Vote Leave alleged that the move was ‘corrupt’ and violated the Bribery Act 2010, Michael O’Leary, owner of Ryanair, called the complaint ‘desperate’.
In other referendum news, 250 British cultural icons, including Benedict Cumberbatch, Helena Bonham Carter and Paloma Faith, have signed a letter expounding the benefits of EU membership. The letter states that:
‘From the smallest gallery to the biggest blockbuster, many of us have worked on projects that would never have happened without vital EU funding or by collaborating across borders. Britain is not just stronger in Europe, it is more imaginative and more creative, and our global creative success would be severely weakened by walking away.’
That’s it for the UK Referendum roundup this week, but we’ll be back next week with all the latest UK-EU news to keep you up to speed with the debate as it progresses.
The Pound Sterling to Euro (GBP/EUR) exchange rate was trending in the region of 1.2980 and the Euro to Pound Sterling (EUR/GBP) exchange rate was trending in the region of 0.7704 today.