- GBPUSD rates heading for 1.47 ahead of the EU Referendum
- A Remain vote could push rates into the 1.50’s
- Janet Yellen on the FED warns about the global economic implications of a Brexit
- FED forecast slower growth
- Interest rate hike less likely this year
It’s almost like the results of the EU Referendum have been seen through a crystal ball and Investors are already cashing in on the results. Despite polls indicating a neck on neck race the bookmakers remain confident in a Remain vote come Friday.
The polls and the bookmakers have been the largest driving forces behind Pound strength in the run up to tomorrow and with Remain on their side, Investors are confident in the results, but should they be?
I’ve mentioned previously that polls are not always indicative of the final result and bookmakers are not always right. Never the less, GBPUSD rates are at a 6 month high, and could move towards an 18 month high if the results of the Referendum point to a Remain.
FED meeting summary
Janet Yellen spoke to congress yesterday addressing the current economic outlook of the US and the concerns over a Brexit on the global economy.
The overall consensus is that the US economy is growing at a slower rate than predicted in 2012 and will likely take longer to recover, this could have implications on Interest rate decisions this year which could weaken the Dollar as we approach the US election and beyond.
Further discussions continue today with Yellen and congress, Brexit appears to be on the agenda again although Yellen has taken a softer approach to the Brexit debate, arguing that a Brexit ‘could’ impact the US economy.
Is now a good time to buy USD?
I predict GBPUSD rates to move into the 1.50’s if the UK remain in the EU, but this is essentially a gamble to which I cannot advise. Current levels are attractive at 1.47 and you may wish to buy today to avoid any repercussions in the event the UK decide to withdraw from the EU. A leave vote could see GBPUSD rates fall into the low 1.40’s which could make a difference of $5000 on a £100,000 purchase.
