Pound Sterling (GBP)
As the latest opinion poll suggests the ‘Brexit’ vote is too close to call, once again Sterling saw itself weakening against the majors.
Following the ICM’s opinion poll on Tuesday, a YouGov poll published yesterday showed voters are evenly split on the issue with 13% still undecided.
Following its recent trend, the Pound depreciated further as the cost of hedging against volatility jetted up to its highest level since around 2009. British sentiment was further hurt by the Organisation for Economic Cooperation and Development (OECD) slashing its projected UK growth figures from 2.1% to 1.7%, citing a drop in demand due to fears surrounding the referendum.
The construction PMI indicates a slight contraction in output, a contrast to yesterday’s report of a decent boost to manufacturing. The Pound was little changed after the report’s release..
Euro (EUR)
The Pound to Euro exchange rate slid by over a cent yesterday as uncertainty provoked by the UK’s referendum on EU membership prompted investors into playing safe and backing out of the currency.
With the vote approaching, investors are weary of further Pound depreciation. GBP’s inability to rally after the encouraging release of UK manufacturing PMI data cast doubt over investor confidence in the Pound, even with the sector performing better than expected.
A European Central Bank (ECB) announcement regarding monetary policy for June is to be released later this afternoon, though analysts expect a neutral stance with the bank not altering its outlook just yet. Potential for movement in the single currency could be prompted by the ECB hinting at the unlikelihood of future loosening or, conversely, talking up the chance of near term stimulus.
US Dollar (USD)
Further ‘Brexit’ concerns amid increased uncertainty caused additional declines for the Pound against the Dollar yesterday, with the pairing lowering by around a cent.
With mixed data coming from the US and the prospect of a ‘Brexit’ on the horizon, the US Federal Reserve is set to err on the side of caution. Both Markit’s and ISM’s manufacturing data is unlikely to have much of an impact on the ‘Buck’ as the Fed will be looking more towards inflation, wages and economic stability to make its decision.
Canadian Dollar (CAD)
Increasing fears for a ‘Brexit’ prompted the commodity currency to rally half a cent against the Pound yesterday.
Ahead of today’s OPEC meeting and after the release of some positive manufacturing data, the ‘Loonie’ gained mildly. Traders are hoping the meeting will garner support for curbing crude oil output to drive prices up.
Australian Dollar (AUD)
Even after an impressive three cent gain against Sterling on Tuesday, the ‘Aussie’ increased by a further 1.5% after some positive data from the Asia-Pacific area yesterday.
A domestic growth report pointing to an almost doubling output for the first quarter increased confidence for investors with Chinese manufacturing data also exceeded expectations slightly. However, doubts over iron ore prices (which saw the biggest monthly loss in five years) have caused a slight dip in the ‘Aussie’s’ value and ore is pegged to lower even further by the end of the year. A break in Chinese steel production sees demand decreasing unfortunately, with increased supply pushing the prices lower.
New Zealand Dollar (NZD)
Falling by two cents, the Pound to New Zealand Dollar exchange rate was affected by stronger than expected Chinese data as risk sentiment increased in the Oceanic/Asian region. Dairy prices rising by 3.4% after the latest GlobalDairyTrade auction instilled some confidence among investors as they moved to support the ‘Kiwi’.
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