Sterling
The Pound strengthened versus most of the majors over the weekend as ‘Brexit’ sentiment dampened during a three-day break from EU referendum campaigning.
Both sides halted their campaigns following the tragic murder of Labour MP Jo Cox on Thursday and the most recent polling data suggests that support for the ‘Remain’ camp increased during the hiatus. This allowed the Pound to recover some of its recent losses against its most-traded currency peers.
Surveys undertaken prior to the fatal attack suggest that sentiment was already beginning to swing back in favour of the status quo but further turbulence is expected in the days preceding the vote.
Euro
The Pound to Euro exchange rate strengthened by around a cent over the weekend as markets adjusted their positions to reflect a shift in voter sentiment back towards maintaining Britain’s membership of the European Union.
European Central Bank President Mario Draghi urged national governments to implement progressive measures to bolster economic stability and sure up national security. The ECB Chief hinted at the ‘Brexit’ debate with a warning that trust in the European project could be compromised if leaders do not act decisively to build a stronger union.
Although the ECB has not explicitly stated as much, analysts expect the central bank to loosen monetary policy further if the ‘Leave’ campaign are victorious on June 23. However, the immediate market reaction to a ‘Brexit’ debate would almost certainly see the Pound suffer huge losses against the single currency.
US Dollar
Sterling rallied by around 250 pips against the US Dollar over the weekend as ‘Brexit’ campaigning paused following the horrific street shooting of Labour MP Jo Cox.
The implied probability of the ‘Remain’ camp coming out on top rose from 60% to 67% on Friday as investors bet that the murder of Jo Cox could influence UK voters. Thomas Mair, who has been charged with the murder, gave his name as ‘Death to traitors, freedom for Britain’ in court, prompting analysts to predict that undecided voters may back ‘Remain’ to distance themselves from Mair’s violent act.
Canadian Dollar
The Pound jumped almost two cents against the Canadian Dollar over the weekend, to reach a fortnightly high at the beginning of this week’s session.
Data on Friday showed that Canadian consumer prices rose 0.4% in the month of May, which drove the headline annualised CPI index down from 1.7% to 1.5%. This weighed on demand for the ‘Loonie’ as the probability of further easing from the Bank of Canada became ever so slightly higher.
Australian Dollar
Sterling appreciated by around two cents to hit a weekly high against the Australian Dollar over the weekend as bets of Britain voting to leave the European Union decreased following a three-day hiatus of referendum campaigning.
It looks to be a quiet start to the week for ecostats but markets will be interested to hear the minutes of the Reserve Bank of Australia’s latest policy meeting in the early hours of tomorrow morning. Any dovish rhetoric could hurt the ‘Aussie’, while any hawkish hints could bolster demand for the high-yielding currency.
New Zealand Dollar
The Pound racked up gains of around three cents over the weekend against the New Zealand Dollar, reaching a 10-day high in the process, as Sterling rallied in response to a cooling of anti-EU sentiment in Britain.
Data Released
No significant data due for release today.
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