- Pound Euro Surges as ‘Brexit’ Bets Ease – Polls indicate shift away from ‘Leave’ vote
- Euro (EUR) Sturdy on Pound Cross-Flows – But well down against Pound itself
- Update: ECB Prepared for ‘Brexit’ – But markets expect ‘Remain’ result
- Forecast: EU Referendum on Today– Global markets keep eyes on UK
Pound Euro Predictions Point to Parity on Vote to Brexit
The EU referendum is finally upon us and although bookies appear confident that the UK will vote to remain, the Pound Euro exchange rate slipped as polls opened amid concerns that the ‘Leave’ campaign could win the day.
In the opinion of Josh Ferry Woodard, currency analyst with TorFX; ‘The Pound could fall towards 1.20 in the immediate aftermath of the referendum if Britons vote to leave the bloc, and analysts warn that GBP/EUR could slide to parity by the end of the year following a potential ‘Brexit’. On the other hand, if the UK votes to maintain its EU membership then we could see Sterling rally towards 1.36-1.40 fairly rapidly.’
The Pound has already recovered from 1.25 to 1.30 on the back of a turnaround in sentiment over the last two weeks. While polls previously put the ‘Leave’ camp ahead, the tide appears to have turned in favour of ‘Remain’.
As it stands, the Pound Euro currency pair was trading in the region of 1.3057, unchanged from the day’s opening levels. Additionally, with the latest YouGov poll indicating a ‘Remain’ victory, the GBP/USD exchange rate surged 0.7%.
(Previously updated 22/06/2016)
GBP/EUR Slows Advances on Wednesday
The Pound to Euro exchange rate traded more flatly on Wednesday after gaining solidly throughout Monday and Tuesday. However, GBP/EUR’s ability to hold above 1.30 indicates that markets are confident in a ‘Remain’ vote.
The Euro was left relatively uninspired in comparison. While sentiment that Britain will vote ‘Remain’ is also good news for the Euro, the appeal of more risky investments like the Pound and risk-correlated currencies left the relatively safe Euro trading quietly by comparison.
New ZEW confidence surveys did little to boost the Euro against a strong Pound despite coming in above expectations. German economic sentiment jumped from 6.4 to 19.2 in June, while Eurozone sentiment improved from 16.8 to 20.2.
The Euro may have been weighed down slightly by comments from European Central Bank (ECB) President Mario Draghi however. While Draghi reassured markets by saying the ECB had the necessary plans in place in the event of a ‘Brexit’, the thought of further economic stimulus for the Eurozone did not excite investors.
With the EU Referendum vote finally taking place throughout Thursday, all markets will be focused on that as well as the possibility of new poll figures and exit polls that could indicate a possible result. Official results, however, are not expected to be released until Friday morning.
(Previously updated 13:25 22/06/2016)
Pound Euro Exchange Rate Holds 1.30
The Pound Euro exchange rate advanced to a high of 1.3044 during Tuesday’s European session as renewed sentiment for the ‘Remain’ campaign kept GBP demand high ahead of the referendum.
Mixed UK public borrowing data had little impact on the Pound and the Euro failed to gain on its British rival despite the ZEW economic sentiment surveys for Germany and the Eurozone exceeding forecasts.
Popular ex-England footballer David Beckham pledged his support for the ‘Remain’ campaign, prompting this response from Prime Minister David Cameron:
‘There was a very moving statement today from David Beckham talking about his children and saying how effectively, what he said to me was, ‘You can’t win in Europe, unless you’re on the pitch’. And that’s true. I worry about that as prime minister, I know that we sit around the table and make decisions about security and safety and fighting terrorism and all the rest of it, fighting climate change. And if we leave they don’t stop meeting and making decisions that affect us, but they’ll be making decisions about us but without us in the room and that would be bad for Britain.’
Given Beckham’s popularity, his statement could help make up the mind of some undecided voters.
Over the course of the European session the Pound Euro exchange rate fluctuated between 1.2903 and 1.3061. The Pound’s performance against several of its other main peers was more mixed, with GBP/USD holding at the day’s opening levels and both GBP/AUD and GBP/NZD dipping.
By Wednesday the rate of the UK’s uptrend had slowed markedly, with the asset just about holding the day’s opening levels against the Euro and US Dollar.
(Previously updated 08:00 21/06/2016)
The Pound Euro (GBP/EUR) exchange rate soared during Monday’s session as investors continued to react to a perceived shift in ‘Brexit’ bets that began late last week. The Euro remained sturdy in the main, but plummeted against a bullish Pound.
GBP/EUR headed towards a new June high, hitting 1.2940 and gaining around 180 pips on Monday alone in response to polls released through the weekend. At the time of writing, the pair was trending in the region of 1.2940.
Some analysts have forecast that a vote to remain part of the European Union could see GBP/EUR rally all the way to 1.36 in the immediate aftermath of the vote. However, a vote to leave could see the Pound shed as much as 10% across the board.
Pound (GBP) Exchange Rate Bullishness Increases Despite ‘Neck-and-Neck’ Referendum Polls
The Pound struggled to maintain any height in recent weeks as EU Referendum opinion polls revealed a shift in favour towards a ‘Brexit’.
However, polls released since last Thursday saw the lead in ‘Leave’ voters shrinking, with some polls even suggesting a swing to ‘Remain’ favour this week – the week of the referendum.
British data has done little to inspire Pound movement with the nation, and much of the rest of the world, currently focused on the potential outcome of Thursday’s historic vote.
Monday’s Rightmove house price report improved from 0.4% to 0.8% month-on-month, but fell from 7.8% to 5.5% year-on-year.
According to The Independent, a number of polls conducted since last week have reflected this perceived strengthening in the ‘Remain’ campaign.
A YouGov poll for the Sunday Times found support for “Remain” is up 5 points to 44 per cent while support for “Leave” has fallen 3 points to 43 per cent.
About 1 in 10 voters are still undecided but, when pushed to predict which side they are more likely to support, 20 per cent plump for “Remain” — almost double the 11 per cent who say they are more likely to vote to Leave. …
The findings reversed the result of Survation data on Thursday which had Leave ahead on 45 per cent and Remain on 42 per cent.
An Opinium poll for the Observer put both sides on 44 per cent, with 10 per cent saying they are undecided.
Euro Remains Sturdy on Lower ‘Brexit’ Bets, Pound Euro Predictions Clouded
While the Euro dropped considerably against the Pound during Monday’s trade session, cross-flows left the Euro up against many of its other rivals.
Due to the Euro’s close relationship with the Pound, as well as the Eurozone and EU’s connections to Britain, the Euro is widely considered to be the currency that would be hit the hardest by a ‘Brexit’ – after the Pound of course.
With many European Union officials warning of the damage to the EU that a ‘Brexit’ could cause, the Euro’s favour has also fluctuated in response to the latest EU Referendum news.
The Euro may not react as directly as the Pound, but has strengthened against other rivals due to its association with Sterling.
Recent Eurozone news appears to have done little to inspire movement in the Euro, as Monday’s positive German producer price report was ignored in favour of the latest ‘Brexit’ polls.
Last week, European Central Bank (ECB) President Mario Draghi reminded markets once more that European governments and financial officials needed to unify in order to strengthen the Eurozone economy as well as favour for the EU.
‘We have seen that the price of inaction is high. We have seen how it leaves the economy vulnerable to instability. We have seen how the perceived impotence of public authorities in meeting the needs of their people feeds into frustration and rejection. And we have seen how that risks undermining trust in and support for our institutions – and even the European Union itself.’
Pound Euro (GBP/EUR) Exchange Rate Forecast: ‘Brexit’ Debates in Focus
This is it; the week of the EU Referendum vote itself. With the vote now mere days away, the Pound’s volatility is likely to continue to soar and could reach new heights, especially if polls reflect another shift towards ‘Leave’ or ‘Remain’.
Both the Pound and Euro will strengthen from indications of increasing support for the ‘Remain’ camp, but the Pound would advance over the Euro considerably. A strengthening ‘Leave’ camp would see the Pound reverse all its recent gains and free-fall, dragging the Euro down with it.
This week’s data is unlikely to be considerably influential with such a key global event in the coming days. Regardless, the British public finance report is due for release on Tuesday morning, followed by the latest ZEW survey results for the Eurozone.
ZEW’s report will contain German current situation and economic sentiment figures for June, as well as the Eurozone’s June economic sentiment result. Mario Draghi is also expected to speak in Brussels on Tuesday afternoon.
Regardless, the Pound to Euro exchange rate is likely to continue to move in response to any shifts in ‘Brexit’ bets throughout the week.
