- Posted by Shyam Gokani in Bank of England, Brexit, Currency, Dollar, Economy, EUR, GBP, Mark Carney, Sterling, UK
- May 24, 2016
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Sterling rose against the euro and the dollar this morning, boosted by a poll that showed the “Remain” camp was well ahead over their “Leave” rivals with a month to go before a vote on Britain’s future in the European Union.
On Monday, sterling started the week on a shaky note after warnings from Prime Minister David Cameron and finance minister George Osborne that a vote to leave the EU could push Britain into a year-long recession and cost at least half a million jobs.
But the latest poll from ORB published in Tuesday’s edition of the Telegraph newspaper gave the “Remain” camp a 13-point lead over their “Leave” rivals, after winning support for the first time from a majority of men, those aged over 65 and Conservative voters. That seemed to soothe nerves.
Attention will now turn to a testimony by Bank of England chief Mark Carney and three other policymakers before lawmakers. In the past, Carney has warned about downside risks from Britain exiting the EU, comments which have drawn sharp criticism from those campaigning to leave the union.
Brexit concerns drove the pound down 11 percent on a trade-weighted basis between mid-November and early April, when it hit a 2-1/2-year low, but it has recovered almost 5 percent. That rise came as investors priced out chances of a rate cut that some were factoring in if Britain opted to leave the union.
But with investors also starting to factor in greater chances that the Federal Reserve could raise rates this summer, traders expect gains in the pound against the dollar to run out.
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