Article / 06 June 2016 at 2:18 GMT

Brexit: Sterling hits a three-week low as leave camp gains in poll

APAC Sales Trading Desk / Saxo Capital Markets
  • Another poll favouring the Leave camp has been released
  • The GBPUSD market is likely to be choppy for now
  • UK shares made gains, although supermarket share prices retreated

By Saxo APAC Sales Trading

Despite the strong drop in US dollar against literally all currencies, GBP dropped to a three-week low following another poll this weekend favouring the Leave camp.

The pound sterling touched the strong support 100 day moving average, at 1.4346 but managed to close above that level. We still trade within the range of the 100 day to 200 day moving average and expect the market to be choppy inside for the time being.

 Former Prime Minister John Major describes the Brexit campaign as "squalid” and its prominent supporter, former London Mayor Boris Johnson (above), as a “court jester". Photo: iStock


All the vols are trading much higher and close to the year highs again following another Poll favouring a leave outcome to the June 23 vote.

From three momth to 1 year, the curve is 2 Vols higher with the 3M ATM being now at 14.76 for example compared to 12.4 the start of last week.  The one month ATM has surpassed the high of the year at 21.4 and the day itself of the vote is pricing 97% in Vol

UK rates drop

UK rates dropped more than 6% following the remaining global rates after the release of the disappointing nonfarm payroll number. The market is now pricing in a 24.4% of chance for a rate cut in August and 40% in December

Equities make gains

The FTSE finished slightly up but supermarkets became the biggest casualties on the FTSE as fears intensified that Asda is planning a new round of price cuts. Shares in the supermarket chain Tesco tanked 4.4% to £1.62, retailer Sainsbury’s slid 4.2% to £2.462, retailer Morrisons lost 3.8% to £1.889 and online supermarket Ocado fell 5% to £2.636.

Following gains by gold move, shares in mining company Fresnillo leapt 7.6% to £11.23 and Randgold Resources jumped 6.8% to £62.50. Miners enjoyed a rally on the back of the US dollar weakness.

Political banter

Prime Minister David Cameron hit back Monday with a joint letter signed by senior figures from other political parties accusing the Leave campaign of perpetrating an “economic con-trick” on the public.

That warning came a day after former Prime Minister John Major took to the airwaves to condemn the “squalid” Brexit campaign and dismissed its most prominent supporter, former London Mayor Boris Johnson, as a “court jester.”

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

For more on forex, click here.

– Edited by Robert Ryan


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