The pound is under pressure this morning after Brexit polls released over the weekend showed further support for the leave campaign. ITV announced that its latest results from a survey conducted by YouGov indicated 45% would vote for an exit, with 41% favouring to remain and additional comments from the Daily Telegraph that most of its subscribers will vote out saw a large move lower in sterling when FX markets opened last night. The majority of this move has been subsequently pared in the past hour, but the currency remains susceptible to further sharp moves in the coming weeks as the market becomes more sensitive to polls the closer the referendum gets.
FTSE begins the week brightly
Mining stocks are leading the charge higher today with Anglo American, Rio Tinto, BHP Billiton and Glencore all up by more than 5% in early trade. Part of the gains can be attributed to a decline in the US dollar following Friday afternoon’s weak NFP report, which has given commodities a boost as expectations for a Fed rate hike this summer have receding substantially over the past week. Airline stocks are flying lower this morning with International Consolidated Airlines and easyJet the two worst performers on the index.
All eyes on Yellen
The main economic event of the day comes after the European cash close with Fed chair Janet Yellen scheduled to speak about the economic outlook at the World Affairs Council at 17:30. Since the surprisingly soft NFP print on Friday, there’s been two Fed speakers offering their view on monetary policy which has provided some insight into the thought process of the rate-setting body. Shortly after the release, Lael Brainard warned that given the weakness in the most recent second-quarter data a policy of wait-and-see was probably appropriate, while this morning Eric Rosengren urged caution in jumping to conclusions prematurely - stressing that it was important to see if the NFP was an anomaly or a sign of broader weakness. The language and rhetoric used later by Yellen could provide further clues as to the path of the Fed funds rate for the rest of the year with any dovish remarks likely to apply additional downside pressure to the US dollar.