- Pound Sterling likely to rally in the event of a remain
- Bookmakers, polls and the market all point towards a stay vote
- A vote to remain could boost GBPEUR and GBPUSD rates by 2-5 cents
- UK economic data after the Referendum
As the polling stations begin to draw a close to the EU Referendum, the market waits with huge anticipation over the outcome of today’s voting. What little we can take as fact, various of the recent polls hint at a remain lead with the bookmakers standing firm with a 70% remain.
The Pound continues its uphill trend despite one of the biggest political events of the decade, current polls are still tight and indicates just how evenly split the UK is in their opinion towards the EU. If the polls, bookmakers and investors have got it right, tomorrow should be a remain win.
So what does this mean for Pound Sterling? As we have witnessed with the change in polls over the course of the weeks, whenever the leave camp built momentum, Pound Sterling fell and vice versa.
From an economic perspective, a Leave vote puts the UK into a black hole of uncertainty, during uncertain periods investment moves into safe-haven currencies such as the US Dollar. A Leave vote could signal extended periods of uncertainty as the UK tries to renegotiate terms with the EU, and that’s if they want to renegotiate.
A remain vote tomorrow, signals certainty as the UK continues its current relationship with the EU, a remain vote could strengthen GBPEUR and GBPUSD exchange rates by 2-5 cents.
After the results, Sterling will become vulnerable to the latest economic releases as focus switches back to the figures. Mortgage approvals and GDP figures for Q1 will give investors an indication of just how much damage the looming Referendum may have caused.
I would therefore recommend you take advantage of the GBPEUR or GBPUSD rates after the Referendum, assuming Remain win. Pound will become vulnerable to economic data and rates could well fall again.
