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Brexit worries hit Sterling value

Sterling was subdued this morning, shrugging aside better-than-expected services sector data and staying on track for its worst weekly performance since late March on worries about Britain’s future in the European Union.

Services activity index rose to 53.5 in May from 52.3 in April. That was stronger than the median forecast of 52.5 in a poll of economists but still one of the weakest readings for the sector in three years.

Britain’s economy looks set to grow by 0.2 percent in the second quarter, stronger than the outlook a month ago but still a slowdown from growth of 0.4 percent in the first three months of 2016.

The focus now turns to U.S. non-farm payrolls report due out later today. Traders said a robust number is likely to lift the dollar and could see the pound visit this week’s low of $1.4385, which was its lowest since May 16.

Sterling has been weighed down since late last year by worries over the June 23 referendum on EU membership. Britain’s hefty current account deficit – 7 percent of output in the last quarter of 2015 – makes the economy, and the currency, vulnerable to any pull-back in investment flows.

Data released on Wednesday showed the manufacturing sector was barely expanding in May due to the uncertainty over the referendum.

The British pound would sink 9 percent against the dollar in the immediate aftermath of Britons voting to leave the European Union on June 23, a poll of foreign exchange strategists showed on Thursday.

Conversely, if they decide to remain in the 28-member union then the pound would gain 4 percent on the greenback, the survey of more than 30 currency forecasters taken in the past week found.

David Cameron was interviewed and held a Q&A session with a live audience on Sky News last night. He highlighted over and over again that it would harm the UK economy if we were to leave the single market.

After being accused of his scaremongering tactics and waffling; overall the prime minister handled it well. Tonight is the turn of Michael Gove the leader of the Brexit campaign.

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