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Pound Sterling (GBP) Gains Soften after Investor Over-Indulgence

May 18, 2016 - Written by David Woodsmith

The Pound has been reduced in appeal of late due to the excessive profit-taking of investors on the previously strong Pound.

The Pound has continued on its bull run against peers today, having been sent soaring by the latest polls for the EU Referendum.

Latest EU Referendum Poll Boosts Pound Sterling (GBP) Exchange Rates

The Pound Sterling (currency : GBP) has posted strong gains since the start of today’s session thanks to the publication of an opinion poll, commissioned by the Evening Standard newspaper and carried out by pollsters Ipsos Mori. The leading canvassers found that support for the UK to ‘Remain’ in the European Union had jumped to 55%, while only 37% of those questioned stated an intention to vote for the UK to ‘Leave’ the EU.

The poll revealed that only 8% of those questioned remained undecided – even if all of these opted to vote for the ‘Leave’ campaign, (a highly unlikely scenario), then ‘Remain’ would still win the vote, which is due to take place on 23rd June, by a whopping 10%. Conversely, if all 8% took what is considered to be the ‘safe option’ and voted to keep the status quo, then ‘Remain’ would win the day by 26%.

GBP/EUR Exchange Rate Reached Highest in Three Weeks at Over 1.29

As recently as a month ago the same pollsters found that ‘Remain’ enjoyed a 10% lead – the fact that this has widened out by such a significant amount in such a short space of time has led analysts to conclude that the momentum is strongly with ‘Remain’.

Insiders suggest that the ‘Remain’ campaign will need to win the referendum by at least 53% / 47% in order for current UK Prime Minister David Cameron to keep his job. Today’s poll hints that such an outcome is highly likely and the promise of stable political continuity in the immediate aftermath of next month’s vote has provided Sterling with an additional boost.

The Pound Sterling recorded strong gains against the other most actively traded global currencies as a result of the news, sending the GBP EUR exchange rate up to its highest level in over three weeks at 1.2931.

Meanwhile, Sterling enjoyed even greater gains against the high-yielding Commodity Dollars thanks to the generalised risk-off trading environment in the markets. Both the Pound Australian Dollar and the Pound New Zealand Dollar exchange rates climbed sharply to touch fresh near term highs of 2.0112 GBP AUD and 2.1610 GBP NZD earlier.

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