Sterling
The word around Leicester is that a certain Jamie Vardy has been throwing parties as often as he’s been scoring goals this season. With UK economic data slowing in the run-up to next month’s EU referendum, the Pound, it appears, has not been invited many of these parties.
But all that changed yesterday when respected pollsters IPSOS MORI reported that the remain campaign currently holds an 18-point, 55% to 37%, lead over the leave camp. Demand for Sterling skyrocketed in reaction to the news.
In other news, it was reported that UK unemployment remained at 5.1% and that the employment rate reached an all-time high of 74.2%. Wage growth grew from 1.9% to 2.0%, but stripped of bonuses the figure slumped from 2.2% to 2.1%.
Euro
The Pound to Euro exchange rate rallied by around two cents yesterday to strike a new two-month high as Sterling traders partied following a strong showing for the remain camp in the most recent EU referendum opinion poll.
The significant positive reaction on the currency markets to the ‘Brexit’ poll suggests that investors are becoming more confident that Britons will not vote to leave the EU next month. Additionally, the single currency was hampered by inflation data showing that consumer prices shrank -0.2% in the currency bloc during April.
US Dollar
Sterling strengthened by around 150 pips against the US Dollar during the London session yesterday. Demand for the Pound jumped following the results of IPSOS MORI’s latest EU opinion poll, having previously softened on the mixed UK wage growth figures.
During the evening the Federal Reserve released its latest minutes report, which showed that some policymakers were considering voting to raise rates in June. However, despite the latest polling results, the threat of a ‘Brexit’ could prove too great to persuade the central bank to hike ahead of Britain’s EU referendum.
Canadian Dollar
The Pound rallied to a new two-month high against the Canadian Dollar yesterday on improved UK sentiment and lower moves in oil markets.
Crude oil, Canada’s most lucrative export, dipped slightly yesterday in reaction to a surprise buildup in US inventories. Markets were primed for a decline of -2.8 million but the actual figure saw stockpiles rise +1.3 million. Oil and the ‘Loonie’ depreciated as fears of a supply glut resurfaced.
Australian Dollar
Sterling racked up an impressive three-cent daily gain against the Australian Dollar yesterday, as ‘Brexit’ bets decreased rapidly in response to new polling data.
In addition to the IPSOS MORI poll, British investors were pleased by an announcement from Betfair, suggesting that there was a 76% implied probability of the UK voting to remain part of the EU.
New Zealand Dollar
The New Zealand Dollar followed the ‘Aussie’ lower by around three cents to a new three-month low against the Pound yesterday. It was very much a case of the Pound having a party, more than anything specifically related to the high-beta ‘Kiwi’.
Data Released
09:30 GBP Retail Sales (YoY) (APR) Medium 2.0%
12:30 EUR ECB account of the monetary policy meeting Medium
15:00 USD Leading Indicators (APR) Medium 0.4%