Sterling
The wheel of luck spun out of Sterling’s grasp yesterday as the UK currency suffered steep losses across the board during the afternoon.
After a fortnight of positive economic sentiment, stemming from a slew of opinion polls giving the ‘Remain’ camp a sizable lead in the run up to the June 23 EU referendum, the Pound took a hit yesterday when a Guardian / ICM poll showed that voters were moving in favour of taking the UK out of the European Union. The telephone poll suggested that 45% of respondents would vote to leave the EU compared to just 42% who wanted to remain.
This morning’s UK manufacturing PMI result is unlikely to give Sterling an immediate boost: analysts anticipate a contractionary score of 49.6.
Euro
The Pound to Euro exchange rate slumped by over a cent yesterday, falling to a weekly low, as investors upped their ‘Brexit’ bets inline with the latest EU referendum opinion poll.
European data showed that unemployment within the Eurozone remained at a heady 10.2%, while inflation within the currency bloc matched economists’ forecasts of -0.1%. The May CPI print marked a slight improvement on April’s -0.2% but, seeing as the figure is still miles away from the European Central Bank’s 2.0% target rate, the single currency failed to attract buyers following the report.
US Dollar
There were a number of medium significance US ecostats released yesterday, however, it was the latest EU referendum poll that stole the show and made waves across the currency market.
Sterling depreciated by over a cent in reaction to the opinion poll, causing GBP/USD to hit its lowest level in a week.
Across the pond in the US, the hawks were pleased with a 1.6% personal consumption expenditure print (the Federal Reserve’s preferred method of measuring inflation) and a surprise 1.0% rise in personal spending. However, the doves will argue that June is too soon for a rate hike considering that consumer confidence shrunk from 94.7 to 92.6 and the Chicago business PMI fell from 50.4 to 49.3.
Canadian Dollar
Sterling rallied initially against the Canadian Dollar yesterday thanks to some underwhelming Canadian GDP data. Statistics Canada reported that economic growth contracted -0.2% in the month of March, which brought the yearly figure down from 1.4% to 1.1%, unexpectedly.
However, GBP/CAD gave up its gains and declined by almost a cent in reaction to the ICM EU opinion poll before the close of the London session.
Australian Dollar
The Sterling to Australian Dollar exchange rate tumbled by over three cents yesterday.
The ‘Aussie’ gained support following a surprise 0.7% rise in building approvals, which massively overshot expectations of a -6.7% contraction. The Antipodean currency continued to rise in demand during the afternoon when polling data brought the threat of a ‘Brexit’ back to the table.
New Zealand Dollar
The Pound suffered a massive four-cent decline against the New Zealand Dollar yesterday as rising business confidence boosted the ‘Kiwi’ and the latest EU opinion poll piled pressure on Sterling.
Data Released
09:30 GBP Markit UK PMI Manufacturing s.a. (MAY) Medium 49.6
13:00 NZD Dairy Auction Whole Milk Powder MT (JUN 2) High $2,252
15:00 USD ISM Manufacturing (MAY) High 50.4