Sterling has seen a bout of Brexit-related volatility today (and this week), dipping sharply against the dollar, euro and other currencies, before whipping back some. One-month implied volatility for Cable spiked to a new six-year high of 23.7%, up 2 points on the day, as Cable clocked a six-day low at 1.4410. The pair has since recouped above 1.4440. EURGBP spiked from sub-0.7810 levels to over 0.7850, since settling around 0.7830. In a word, choppy, and very much reflective of the fast nearing referendum, which takes place the Thursday after next. Televised debates between Remain and Leave campaigners reached fever pitch this week, stirring a sense of unease among onlookers. The FT’s poll tracker continues to show a narrow 2 percentage point lead for the Remain camp, with 45% support versus 43% support for Leave. Despite the narrowness of this, Bookmaker Ladbrokes is showing that the betting market is giving a 74% probability for the UK remaining in the EU, up from the 69% nadir seen earlier in the week after a spate of polls suggested a shift in support in favour of Leave. Our hunch is that the 12% of undecided voters — who presumably lack the headstrong conviction for leaving the EU like true Brexiters — will be more likely to fall on the Remain side of the fence, if only out of fear of near- to-medium term economic consequences of Brexit.
Construction output data and the BOE Consumer Inflation expectations both beat their consensus figures. Consumers now expect the price of goods and services over the next 12 months to rise by 2.0% compared to 1.8% in the last quarter.
GBPUSD is currently 1.4431 having traded as low as 1.4409. DAILY near term support at 1.4415 and resistance at 1.4545. 1.4700 remains the longer term resistance level as the pair bounces between the 20 DMA and 50 DMA.
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