EDITOR’S NOTE: The pound was up again last week on the strength of opinion polls favourable to a remain vote in the UK’s EU referendum. Foreign currency exchange specialist Luke Trevail explains.
We’re now less than four weeks away from when the British public will be able to decide whether we remain as part of the European Union or decide to go it alone and leave.
Opinion polls have been supportive of the stay campaign in the last 2 weeks or so which has buoyed the pound, but the closer we get to 23rd June will likely cause some profit taking in the market, and perhaps a swing in the sentiment of the voters as each side of the argument vie for position.
This week, we’ve seen a huge run on the pound reaching €1.3230 at the high. Considering we were at €1.2257 on 7th April this really is a momentous shift up. Fundamentally we struggle to deliver any positive data releases in the UK to influence the market so these moves don’t ever seem to have much foundation and are determined by the sentiment in the campaigning and polls surrounding Brexit.
Those who were able to take advantage of trading north of €1.30 were delighted to walk away from the market the right side of this key level, and the correction we’ve seen on Thursday into Friday suggests that it may have run its course. We’re trading around 1.2930 now.
The volatility will only continue the closer we get to the referendum, so the opportunity to take advantage of the market does seem to present itself, but you have to be quick and perhaps not too overly ambitious if it arises again.