- Pound Euro Exchange Rate Remains Sturdy Throughout Thursday – polls add to market confidence
- Euro (EUR) Solid as Investors Await Results – ‘Remain’ sentiment bolsters Eurozone outlook
- Forecast: Referendum Results Due on Friday Morning – Could a ‘Brexit’ begin around 7am?
- Forecast: Eurozone Data Unlikely to Influence Movement – German IFO report due
Brexit Campaign Wins UK Referendum, Pound Euro Exchange Rate Plummets
Initial indications that the ‘Remain’ camp won the day in the EU referendum proved false and as it became clear that the UK had actually voted to Brexit, GBP plummeted across the board, hitting decade lows against a number of its peers.
The GBP/EUR exchange rate dropped from 1.31 to 1.22 and further losses are likely to occur when the European session opens.
(Previously updated 23:10 23/06/2016)
Pound Euro Exchange Rate Jumps to 1.31 as EU Referendum Voting Closes
As the polls closed on the eve of the UK’s EU referendum, the Pound Euro exchange rate surged to 1.31 on the belief that the population opted to remain in the European Union.
With MPs rallying behind the Prime Minister and pledging to support him whatever the result, the Pound also gained on the US Dollar ahead of the final results being released.
The first declaration came from Gibraltar. Unsurprisingly, the region voted overwhelmingly to remain, with the vote split 19,322 to 823.
(Previously updated 19:00 23/06/2016)
The Pound Euro exchange rate is forecast to hold steady on Thursday evening as investors await the results of the historic EU Referendum. Polls close at 10pm, and from that point vote counting will begin. Many markets will remain open throughout the night.
Both currencies enjoyed strong sentiment during much of Thursday’s session, with GBP/EUR trending in the region of 1.3020 at the time of writing. The pair has remained around 300 pips above the week’s opening levels of 1.2735, indicating market confidence in a ‘Remain’ vote.
Pound (GBP) Solid on Eve Before Referendum Results
Markets appear to have priced in a ‘Remain’ result as of Thursday’s session, with the volatile Pound well up from last week’s levels, and the Pound Euro exchange rate holding its ground quite comfortably.
The Pound soared across the board on Monday after polls released over the weekend indicated that sentiment was moving away from the ‘Leave’ campaign since last week.
A ‘Leave’ vote has been seen by economists as a risk for the UK’s economy, and the lack of certainty in the event of a ‘Brexit’ would cause the Pound to drop in value considerably.
As a result, a shift towards the status quo has inspired confidence in investors that the public would vote ‘Remain’ on Thursday, ensuring a more definite future for the Pound’s place in the foreign exchange market.
Markets have also predicted that the key percentage of undecided voters are more likely to vote for the status quo, causing a ‘Remain’ win to have been priced into the Pound despite continued warnings from analysts that the result was too close to call from polls alone.
Thursday’s session saw the release of two final polls. In possibly the first occasion where a poll has been released on poll day itself, Ipsos MORI’s phone poll came in with ‘Remain’ at 52% and ‘Leave’ at 48%. A poll released by Populus saw ‘Remain’ with 55% and ‘Leave’ with 45%.
Euro (EUR) Sturdy Due to Pound Association
The Euro has also benefitted against many rivals due to the market assumption that a ‘Remain’ result is on the cards.
With the European Union’s relationship with Britain in question, the Euro is set to suffer the most from a ‘Brexit’ after the Pound itself as uncertainty over its future worsens. Predictions that a ‘Brexit’ could inspire Euroscepticism in other EU nations would also cause long term issues for the Euro.
Recent Eurozone data has done little to inspire movement in the currency, with global markets focused entirely on Britain’s EU Referendum.
June’s preliminary set of PMI’s scored largely below expectations, a result that would typically cause the Euro to drop.
Germany’s Composite PMI score worsened from 54.5 to 54.1, while the Eurozone’s figure dropped from 53.1 to 52.8. Manufacturing came in above expectations in both regions, however.
The Euro remained sturdy despite the news thanks to investor confidence that Britain would ‘Remain’ in the EU. Ultimately however, the Pound Euro exchange rate remained largely in the Pound’s favour as risk-sentiment stayed high, favouring the risky Pound.
Pound Euro Exchange Rate Forecast to Move Flatly Until Friday Morning’s EU Referendum Results
Investors are unlikely to shift their stances considerably on the Pound or Euro this soon before the future of Britain is decided.
Following the release of the final pre-Referendum polls earlier today, investors will be awaiting the final counts that will be released throughout the night and into Friday morning.
Polls close at 10 PM BST, at which time counting will begin. There will be no exit polls, unlike general elections, due to there being no other recent figures to compare results to.
While investors may begin to react to early area vote counts, the majority of movement in the Pound Euro exchange rate will happen during Friday’s session, after the final results are confirmed.
Currently, results are expected to be released at around 7 AM BST at the earliest. A vote to ‘Remain’ will send both Sterling and risk-sentiment soaring, but the Euro will likely remain sturdy against other rivals on cross flows. A ‘Brexit’ could send GBP/EUR plummeting, with some analysts suggesting the currencies could hit parity by the end of 2016 in this scenario.
On Thursday afternoon, the Pound Euro exchange rate (GBP/EUR) trended in the region of 1.3020, while the Euro Pound exchange rate (EUR/GBP) traded at around 0.7680.