Pound reaches three-month high against Euro
Sterling rallied yesterday against all major currencies, reaching highs against the Euro not seen in three months.
David Cameron held nothing back yesterday when commenting on the likely effects of a ‘Brexit’, claiming that a vote to leave would be “the self destruct option” for the UK. As a result, the latest ORB International poll showed that 55% were in favour of staying in the EU, the same figure printed in last week’s Ipsos MORI poll that brought Cable to highs of 1.4661.
The poll result strengthened Sterling against both the Euro and the Dollar again, with GBPUSD and GBPEUR opening today at 1.4605 and 1.3101 respectively. Today, there is no key data due for release from the UK.
US new home sales soared for April, rising 16.6% from the previous month which dwarfed the 2% the markets had expected. Given the recent comments from Fed officials paving the way for a June rate hike, the strong housing data will no doubt add fuel to the fire.
However, given that Brexit is dominating the sentiment around Cable (GBPUSD), the Dollar bulls failed to extend the recent winning streak and Sterling managed to gain 1.04% from Tuesday’s open. The Dollar strength did translate into strong gains against the Euro, continuing what has been a positive month for the Dollar bulls. The Greenback has gained 3.5% against the single currency for May so far. EURUSD opens this morning at 1.1141, a fall of 0.71% from Tuesday’s open.
The Euro weakened dramatically during yesterday’s European trading session as the ZEW economic sentiment survey result for May was unexpectedly poor. The single currency fell by 1.61% as the ZEW figures printed at 16.8 in the early hours of the session and is currently trading against Sterling at the 1.3132 levels, the highest it has been since February 2016.
With consensus set at 23.4 for the survey, the dark pessimistic clouds surrounding the EU referendum result continue to cast doubts over European investors and weaken the Euro against the Pound. Euro volatility will continue into tomorrow as the German IFO expectations, current assessment and business climate figures will be released and look to reverse the single currency’s losses.
Data to watch: 10.30am European Central Bank Vice President Vitor Constancio speech. EU Economic and Financial Affairs Council Meeting. 1pm US Federal Open Market Committee Member Harker speech. 1.45pm US Markit Services PMI.
With all the recent EU referendum polls, why not read the results of ours as well?