Article / 21 June 2016 at 7:00 GMT

Morning Markets: GBPUSD makes base at 1.47

Managing editor, / Saxo Bank



  • Germany: ZEW Economic Sentiment             (0900 GMT)
  • UK: CBI Industrial Trends Index                     (1000 GMT) 
  • Fed Chair Janet Yellen Testimony                  (1400 GMT)

The relief rally that helped sterling to its biggest one-day rise since 2008 may have hit a diversion overnight after a poll called the referendum on Thursday in favour of the 'Brexit' camp, but GBPUSD is regathering again around the 1.47 zone.

Sterling's inexorable push had hit a peak of 1.4721 before returning to around the 1.4650 mark during the Asian session after a YouGov poll had the 'Leave' camp at 44% to 42% for 'Stay' but a Daily Telegraph-commissioned poll among voters who had already made up their mind had the Brexiters at just 46% to 53% for those who see Britain's future inside the European Union.

That has helped sustain the perhaps premature sense in markets that the British are ready to keep the status quo and had GBPUSD back above 1.47 in the hour before the European session and over 4% higher than the 1.4013 low of June 16. Implied volatility on GBPUSD across the board also came in from elevated levels as markets anticipate a 'Remain' vote on Thursday.

With the FTSE enjoying a 3% surge on Monday and Brent also rising back above $50/barrel, market enthusiasm might be just a tad overcooked with a degree of wishful thinking possibly playing its part. The ability of either camp to mobilise its constituency effectively on Thursday and register their vote now looks to be the key to determining who will come out on top.

Saxo's own poll is indicative with 65% calling it in favour of a 'Stay'. The intervention this morning from George Soros warning on the dangers of a British exit might also sway voters but it could just as well act as a double-edged sword as the 'Don't knows' look to make their mind up over the next 48 hours.

This remains too close to call and while global markets soar (the Nikkei was up 1.5% despite more USDJPY weakness), there is still far too much uncertainty around Thursday's binary event for traders to approach the market with genuine conviction.

Market signals

Asian session

  • Widespread relief at the fading chances of a Brexit gave sentiment a lift in Asia
  • Asian stocks rose but the USD weakened ahead of remarks by Fed Chair Janet Yellen
  • There is speculation about who will be the next head of the Reserve Bank of India
  • Australia's house price index fell 0.2% in the March quarter, (plus 0.8% was forecast)
  • BHP chief says global oversupply of commodities will drag to drag on for a decade
  • RBA minutes said high AUD could complicate economy’s adjustment
  • The GBP retreated in Asia trade after its biggest jump since 2008
  • Australia’s dollar rose as the central bank reiterated inflation is expected to remain low
  • Oil fell toward $49/barrel, declining with copper and gold.
  • The Nikkei edged up in choppy trade amid volatility in currency market
  • At 0455 GMT the Nikkei Stock Average was up 166 points or 1.04%
  • At 0505 GMT the Hang Seng was up 0.47% and the Shanghai Composite rose 0.26%
  • The Mumbai Sensex was down 54 points or 0.2%
  • The S&P/ASX200 was trading trod water, rising 0.25% at 0525 GMT

Forex ahead

  • The US dollar slipped lower vs the yen; predictions it could hit ¥100 now look realistic
  • The US dollar was worth just ¥103.8620 at 0038 GMT
  • One-week implied volatility on GBPUSD slides from 50% to 38% overnight
  • One-month GBPUSD at 21% from 29% last week
  • The Australian dollar edged higher; it was worth 0.7472 at 0037 GMT

From the Floor

Britain's D-day. "I still think the polls show a very uncertain outcome for Thursday's vote", says Hardy.

Fool's gold. "$1,271/oz is the important support area in gold, but the market is heavily skewed to the upside", says Hansen.

Get all the latest from Saxo Bank's trading floors in From the Floor, within the hour.

In opinion

Germany’s ZEW economic survey report for June will be widely read for a deeper perspective on what the financial community is thinking about a Brexit, writes James Picerno.

Risk assessment
It's important to remember what is at risk and what isn't as the June 23 referendum on Britain's future in the European Union draws closer, explains Michael McKenna.

Too soon to say?
The Brexit referendum is just two days away and our poll is showing a distinct bias towards a 'Remain' vote, but is it a premature assessment, asks Martin O'Rouke.

German exposure
A breakup of either the euro or the European Union, would expose German banks' vulnerable underbellies, writes MBMG Group's Paul Gambles


Brexit polls might be shifting towards a 'remain' vote, but do we really know? Photo: iStock

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21 June
Martin O'Rourke Martin O'Rourke
GBPUSD rose to above 1.4730 in the half hour since publication. It was at 1.4720 at 0731 GMT.
21 June
Martin O'Rourke Martin O'Rourke
GBPUSD has gone past 1.4750. It was at 1.4752 at 0900 GMT.


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