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Currency Newsflash : Investors Put Cart Before Horse ? Sterling Outlook Improves Measurably against Competition

May 24, 2016 - Written by David Woodsmith

Sterling has managed to stay on top for another day, on account of recent 'Remain' campaign strength lowering the odds of a 'Brexit' occurring.

The Pound has remained strong against almost all of its peers today, thanks to continuing investor enthusiasm in Sterling.

ORB EU Referendum Poll Supports GBP Exchange Rate Gains

Support for the Pound Sterling (currency : GBP) has surged during this morning’s European equities session. The driver for the move higher for the UK tender came in the form of an opinion poll published late yesterday which suggested that older British voters are becoming less likely to vote for a ‘Brexit’ than was previously the case.

Earlier polls had suggested that voters aged 65 years and over were almost 4 times more likely to vote ‘Leave’ than those in their twenties. However, the ORB survey in the right-leaning Daily Telegraph newspaper found that in a representative sample of over-65s, some 52% intended to vote to ‘Remain’, while only 42% were now in favour of a ‘Brexit’.

Lynton Crosby, the political wizard credited with masterminding last year’s unexpected UK General Election victory for Prime Minister David Cameron’s Conservative party, placed particular significance on the poll. He commentated yesterday that,

‘The Remain campaign should view these advancements as affirmation that the focus and messaging of its campaign is working,’ before going on to forecast that, ‘if Leave are to regain any of their previous support now lost, they must start paying attention to the numbers and capitalize on their strengths - their steadfast lead on immigration and the way uncontrolled immigration is seen more widely as a symbol of the country’s loss of control of its sovereignty to Europe, coupled with the enthusiasm of their base.’

GBP/EUR Exchange Rate Nearly 1.3% Higher Today

At the time of writing, the Pound to euro exchange rate is trading up by a hefty 1.26% on the day – the pair touched its highest level for 3 ½ months at 1.3083 GBP EUR a short time ago.

Meanwhile, Sterling has recorded even greater gains against the Australian Dollar – the pair broke through the 2.0400 GBP AUD barrier earlier and continues to track higher.

If the market continues to put the cart before the horse and factor in a ‘Remain’ result ahead of the 23rd June Referendum, then FX insiders forecast further gains for Sterling.

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