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FT: BoE preparing contingency plans for Brexit
The Financial Times report on the Bank of England preparing contingency plans for Britain to leave the EU
The full piece from the FT is here and is worth a read on how the Bank is preparing for potential volatility. (Note, the FT may be gated but its often possible to read some articles with a free registration if you are not a subscriber)
Barclays sees Brexit factor making more of a negative impact on UK GDP
Barclays out with a client note. 5 May 2016
Lo and behold after a rally to 1.4516 guess what? Yep GBPUSD is back down to 1.4483. Got to love the jobbing opportunity on this pair lately.
EURGBP pushing back up to 0.7900 after holding 0.7880.
EU Referendum Poll Shows Brexiters Ahead of 'Remain' Camp
The latest poll by TNS research agency showed 41% of respondents to the survey thought Britain should leave the European Union (EU), while only 38% preferred their country inside.
The poll also showed there was one in five voters (21%) who were still undecided on whether to vote to remain or leave the EU.
The polls coming out in recent weeks have been showing mixed sentiment toward EU membership ahead of the June 23 referendum, with the underlying trend skewed only slightly to the ‘Remain’ camp.
"This [TNS] poll suggests that we are seeing movement from undecided voters towards the Leave camp, though we will need to wait until the next poll to see if this is a trend or random variation," Luke Taylor, head of social and political attitudes at TNS, said in the report.
"Although this poll is the first time since February that we have seen a lead for 'Leave', the race remains very tight with many yet to make up their mind. With five weeks to go until the referendum it remains all to play for and the challenge for the 'Remain' campaign continues to be in getting a high turnout among younger voters," Taylor said.
Latest Brexit poll (just out) 52% to remain, 41% to leave
ComRes / ITV poll / Daily Mail
Brexit latest poll - BMG says 44% for 'remain', 45% to leave
Via Reuters the latest headline poll results
GBP: Brexit Risk Waning: Where To Target?
Sterling has been the best performer over the last month as it was the only currency to outperform the US dollar over that time. With betting odds now approaching 80% for a ‘remain’ vote, we have seen some evidence of GBP shorts being covered. We continue to argue that telephone opinion polls, which consistently point toward leads for the ‘remain’ camp of around 8-10% are likely to be more accurate than internet polls that invariably overstate support for an exit.
Thus, unless we see a substantive narrowing in the polls, expect markets to become more confident of the result, unwinding GBP negativity in the process. However, the flip-side of opinion poll differentials remaining outside the margin for error could be the level of turnout. The greatest risk for the ‘remain’ campaign is likely voter apathy, strong supporters of ‘Brexit’ are likely to vote, while younger people, who predominantly favour to remain in the EU are less likely to vote.
The recent BoE Quarterly Inflation Report detailed that around half of the slide in trade-weighted sterling could be attributable to ‘Brexit’-related uncertainty. The implication is that the removal of such fears should encourage sterling to recover by a commensurate amount. Moreover, it’s possible that the economy will register a post-referendum recovery. Beyond the June 23rd vote, delayed investment and spending decisions will be reversed, (on the basis of ‘remain’ winning) in the process encouraging the economy to regain lost momentum. However, MPC dove Vlieghe is not convinced that the rebound will lead to tighter monetary policy. Even hawkish member Forbes has suggested that not all of the current slowdown is ‘Brexit’ related. Together, that suggests being wary of extrapolating too much from the recent GBP gains ahead of the vote.
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