The Pound gained further ground yesterday as Bank of England’s Mark Carney re-issued a stern warning about the potential implications of a Brexit. He originally made the statements back in May which angered Brexiteer’s arguing that the Bank were interfering with political events.
He reaffirmed his strong views that a Brexit would have negative connotations for the UK, arguing that it would impact GDP, slowing growth, and may lead to a recession. Under these circumstances, it is the Bank’s duty to warn the public of any potential economic concerns which may be a direct result of political outcomes.
Tory MP Bernard Jenkin, a director of Vote Leave wrote to Carney recently accusing him of endorsing the remain camp.
Carney’s comments have again boosted the Pound ahead of the Referendum, irrespective of the views surrounding Carney’s comments, worries over a UK recession may tip some Leave campaigners to stay which would be seen as positive for Investor confidence.
GBPUSD strengthens to 1.42
The Pound finds ground against the US Dollar but still some distance from month highs of 1.47. Pound-Dollar exchange rates have swung almost 3 cents in the last 24 hours which highlights just how volatile the market is ahead of the Referendum.
Those looking to buy US dollars may wish to do so prior to the weekend, any further polls or changes in betting odds may work against you. In the event of a Leave investors could move to safe-haven currencies such as the US Dollar or Swiss Franc, this could move GBPUSD rates into the mid 1.30’s possibly lower.
GBPEUR rates move half a cent in 1 hour
GBP EUR rates moved half a cent this morning highlighting just how vulnerable the currency pair are to the upcoming Referendum. Mario Draghi’s speech this afternoon is likely to be focused around the Referendum although it’s worth noting that Euro Inflation has seen some positive improvements. Members of the ECB have already begun implementing measures to cushion the impact of a Brexit and he will be meeting with BoE’s Carney on the day of the Referendum. Nevertheless, any further precautionary efforts from the BoE or ECB may help install investor confidence and give further support to the Pound before the results. The next week is likely to remain incredibly volatile for the pair, making an exchange sooner rather than later may be worthwhile.