Steen Jakobsen
The Bank of Japan has abandoned quantitative easing and the European Central Bank may taper its bond-buying programme, so what is the role of central banks in 2017, asks Saxo Bank’s chief economist Steen Jakobsen.
Article / 21 June 2016 at 1:48 GMT

Brexit: Favourable 'remain' poll pushes GBP higher

APAC Sales Trading Desk / Saxo Capital Markets
  • A favourable poll for the Remain camp pushed the GBP higher
  • Rates rallied 9.4 basis points overnight as the risk of a Brexit dimmed
  • Equities also enjoyed a 'Bremain' bounce; the FTSE 100  rose 182.91 points

By Saxo APAC Sales Trading

Another favourable poll for the Remain camp last night pushed the GBP much higher to reach the major resistance at the 200d MA at 1.4683. This level will be important to watch as we have not broken the 200d MA for the past two months and we should see some selling interest here unless a break is confirmed.


What happens when suddenly all the polls are favouring the Remain camp? The volatilities collapse and this is what happened: the whole curve trade is much lower, pricing out the Brexit, with 1M ATM going from 29 to 21 volatilities in less than three sessions. The 3M volatilities moved from 18.5 to 14.

UK rates

Following the rest of the GBP market, rates rallied 9.4 basis points overnight with a risk of Brexit being much less important after the last polls. The market is also pricing less cuts. There is only a 15.5% chance of a cut priced in July.


Stock markets also enjoyed a "Bremain" bounce with the FTSE 100 soaring 182.91 points, or 3.04%, to 6,204, its biggest daily rise since mid-February. The change in sentiment has wiped £66bln back onto the blue chip index since Thursday. 

Risky assets were back in demand with banking stocks leading the charge higher. The industry was hammered last week on heightened Brexit fears. Lloyds jumped 7.6% to 70 pence, Royal Bank of Scotland climbed 7% to 237.7p and Barclays added 6.7% to 176.9p. Challenger banks Shawbrook and Aldermore made gains of 15% and 7.1%, respectively. 

Separately, Royal Bank of Scotland was also boosted by a Sunday Times report that said the bank had halted the marketing push for its Williams & Glyn brand until the first quarter of next year.

Research and comments

If the Remain camp wins, there will still be good value in some equities that have been hit hard ahead of the vote, such as the banking sector and the rally in rates could be more sustained.

 Close camp ... there was another favourable poll for the Remain
vote last night. Photo: iStock 

– Edited by Gayle Bryant

For trade strategies, comments and research regarding the UK referendum on staying in the European Union, please see


The Saxo Bank Group entities each provide execution-only service and access to permitting a person to view and/or use content available on or via the website is not intended to and does not change or expand on this. Such access and use are at all times subject to (i) The Terms of Use; (ii) Full Disclaimer; (iii) The Risk Warning; (iv) the Rules of Engagement and (v) Notices applying to and/or its content in addition (where relevant) to the terms governing the use of hyperlinks on the website of a member of the Saxo Bank Group by which access to is gained. Such content is therefore provided as no more than information. In particular no advice is intended to be provided or to be relied on as provided nor endorsed by any Saxo Bank Group entity; nor is it to be construed as solicitation or an incentive provided to subscribe for or sell or purchase any financial instrument. All trading or investments you make must be pursuant to your own unprompted and informed self-directed decision. As such no Saxo Bank Group entity will have or be liable for any losses that you may sustain as a result of any investment decision made in reliance on information which is available on or as a result of the use of the Orders given and trades effected are deemed intended to be given or effected for the account of the customer with the Saxo Bank Group entity operating in the jurisdiction in which the customer resides and/or with whom the customer opened and maintains his/her trading account. When trading through your contracting Saxo Bank Group entity will be the counterparty to any trading entered into by you. does not contain (and should not be construed as containing) financial, investment, tax or trading advice or advice of any sort offered, recommended or endorsed by Saxo Bank Group and should not be construed as a record of ourtrading prices, or as an offer, incentive or solicitation for the subscription, sale or purchase in any financial instrument. To the extent that any content is construed as investment research, you must note and accept that the content was not intended to and has not been prepared in accordance with legal requirements designed to promote the independence of investment research and as such, would be considered as a marketing communication under relevant laws. Please read our disclaimers:
- Notification on Non-Independent Invetment Research
- Full disclaimer

Check your inbox for a mail from us to fully activate your profile. No mail? Have us re-send your verification mail