- Posted by Shyam Gokani in Bank of England, Brexit, Currency, David Cameron, Dollar, EUR, GBP, Mark Carney, Referendum, Sterling, UK
- June 9, 2016
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Sterling slipped this morning as investors ditched riskier assets in favour of safe havens such as the yen, worrying that Britain will vote to leave the European Union in a referendum in two weeks’ time.
While it has recovered from lows hit earlier this year, up 3 percent on a trade-weighted basis in the past two months, sterling continues to be buffeted by concerns that Brexit would leave Britain short of the investment it needs to fund a huge trade and current account gap.
We believe we’re going to have very jittery markets over the next couple of weeks in the run up to the vote.
Political risk will remain the main driver for sterling up until the July 23 referendum on EU membership.
Britain’s trade deficit narrowed more sharply than expected in April after a record monthly jump in goods exports, offering a hint that a weak recent trade performance may be turning a corner.
The Office for National Statistics said Britain’s total trade deficit narrowed to 3.294 billion pounds in April from a downwardly revised 3.532 billion pounds in March, its lowest level since September 2015.
Goods export volumes jumped 11.2 percent on the month, the biggest rise since records started in 1998, taking the total value of goods exports in April to 26.123 billion pounds, not far from an all-time high set in June 2013.
Thursday’s figures showed that goods export volumes in the three months to April rose by 4.3 percent after dipping 0.1 percent in the first quarter of the year, the biggest increase since the three months to June 2013.
Sterling fell to its lowest since late 2013 on a trade-weighted basis in April, but falls in the cost of British exports are typically slow to trigger a boost in foreign demand.