Brexit Polls Show Neck-And-Neck Race, Will GBP Maintain Its High Price Level?
Dear Traders,
The British pound is exposed to extremely volatile trading conditions in the run-up to the U.K. referendum. Separate polls are showing leads for both sides, creating uncertainty among speculators. The most recent survey showed ‘Leave’ at 44 percent and 42 percent for ‘Remain’, while a different poll saw ‘Remain’ at 53 percent and ‘Leave’ at 46 percent. The British pound rose to a high of 1.4721 on increased risk appetite but, as noted in yesterday’s analysis, it still fluctuates within its range with the annual high at 1.4816. An upside break above 1.4730 may drive the pound towards its May high at 1.4770, while a downside break below 1.4580 could lead to a downswing towards 1.4520 and 1.4470.
U.K. Public Finances are due for release at 8:30 UTC, but Brexit headlines will continue to dominate the price action in the pound.
The euro was slightly tilted to the downside but for the time being, the 1.13-support proved to be intact. Hence, short traders’ efforts didn’t pay off as the downswing was limited. On the upper side, we will now focus on a renewed break above 1.1360 in order to buy euros towards 1.14 and 1.1440. Below 1.1280, we expect bearish momentum to increase, driving the euro towards 1.1230 and 1.12 in a next step.
Fed Chair Yellen is scheduled to testify before lawmakers in a semiannual report today at 14:00 UTC. Yellen is unlikely to provide new insights into the timing of future interest rates but she may stress the risks of a potential Brexit which would harm the U.S. economy. The U.S. dollar might be vulnerable to some losses if she sounds less hawkish.
From the Eurozone, we have the German ZEW Survey scheduled for release at 9:00 UTC, a report that could have a short-term impact on the euro. However, price fluctuation in the EUR/USD will be dominated by the level of risk-appetite for euros and dollars, while economic data will take a backseat with only two days before the Brexit vote.
Before Yellen’s testimony, ECB President Mario Draghi speaks in Brussels at 13:00 UTC.
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