The British pound’s direction of travel at the moment is entirely driven by expectations of the result in the forthcoming UK referendum on EU membership. A currency exchange specialist from TorFX explains.
The EU Referendum Campaigning on Friday has been suspended following the horrific murder of MP Jo Cox in West Yorkshire on Thursday.
Prior to this, the news has been dominated by the Leave campaign continuing to gain ground on the Remain camp. A glut of opinion polls have swung in the favour of a Brexit. Ipsos Mori now give a 6 point lead whereas Survation have them 3 points ahead. There’ll be more opinion polls out of course over the next few days and if the pattern continues then the pound will likely suffer further.
Bank of England Gov. Mark Carney stated yesterday that the “largest immediate risk” to global financial markets is the uncertainty surrounding the EU referendum. He added the pound could fall sharply in the event of leaving the EU and that it’s “increasingly likely” that the market reaction would be to the downside. Economic output has slowed in pace with “major economic decisions” such as real estate and significant business investments being put off until after next week’s vote which has also weighed heavy on Sterling these last few weeks.
Next Thursday into Friday will change the social, political and economic outlook of this country. For some, staying with the old and working with Europe isn’t the right thing for the country. For others staying in bed with our European neighbours rather than jumping into the unknown (perhaps with Boris as Prime Minister!) is not a risk worth taking.
Currency markets will certainly be incredibly affected by this event next week. Some of you that need to enter the market may feel brave and want to wait, for those of you that fear the threat of parity on GBP-EUR in the event of Brexit should seriously consider doing something before next Thursday’s vote. The choice whether we stay or leave is up to the masses, the decision on whether you move your money is up to you!