Sterling
Sterling struck a series of monthly lows against the majors yesterday as betting companies and opinion polls showed support rising for the ‘Out’ camp ahead of the June 23 referendum.
A new poll from ICM gave the ‘Out’ camp a six-point, 53% to 47%, lead over the ‘In’ campaign just 10 days before the vote. Reflecting the recent shift in sentiment, Betfair adjusted its odds to suggest an implied 36% chance that Britons will vote to exit the European Union this month, up from just 22% four days ago.
The uncertainty of ‘Brexit’ continues to weigh on Sterling and will do until the vote takes place. This morning’s UK inflation report is tipped to see consumer prices accelerate from 0.3% to 0.4% but the Pound may struggle to attract buyers following the print in this environment where Sterling has almost decoupled from domestic economic indicators.
Euro
The Pound to Euro exchange rate struck a near-two-month low yesterday in reaction to the latest shift in British sentiment towards voting to leave the EU.
Sterling recovered most of its losses by the end of the London session as profit taking kicked in but we could easily see another slide today if support for the ‘In’ campaign does not receive a boost.
European data is expected to see industrial production print at 1.4% for April, up from just 0.2% in March, which could also put pressure on GBP/EUR.
US Dollar
After nursing losses of over a cent yesterday morning, the Pound to US Dollar exchange rate actually ended the day slightly higher than it began. However, the two-month low that GBP/USD hit during the morning could easily come back into focus today if jittery investors continue to pull out of the Pound in anticipation of the EU vote.
Data due stateside is anticipated to show that retail sales volumes decelerated from 1.3% to 0.3% in May and that business inventories cooled from 0.4% to 0.2%. The ‘Greenback’ could soften if the figures disappoint but the scope for Sterling’s gains appears fairly small at this juncture.
Canadian Dollar
Despite ending the day at similar levels to which it began, the Pound to Canadian Dollar exchange rate slumped to a one-and-a-half-year low yesterday. The move was, predictably, prompted by ‘Brexit’ fears and had little to do with demand for the commodity-sensitive ‘Loonie’.
Australian Dollar
Sterling struck a fresh monthly low versus the Australian Dollar yesterday despite the ‘Aussie’ suffering against other currencies due to trends of risk aversion.
With Chinese retail data printing slightly lower-than-anticipated on Sunday evening and the Federal Reserve due to announce monetary policy on Wednesday, markets appear reluctant to invest heavily in commodity-correlated currencies such as the ‘Aussie’, which are often susceptible to large swings in value.
New Zealand Dollar
GBP/NZD succumbed to a fresh one-year low yesterday as ‘Brexit’ fears weighed, but the Pound managed to recover most of its losses by the end of the day.
Data Released
09:30 GBP Consumer Price Index (YoY) (MAY) High 0.4%
10:00 EUR Euro-Zone Industrial Production w.d.a. (YoY) (APR) Medium 1.4%
13:30 USD Advance Retail Sales (MAY) High 0.3%
15:00 USD Business Inventories (APR) Medium 0.2%