As the markets enter the final week before the Thursday June 23rd Brexit vote, a late relief rally has taken Sterling away from the critical BREXIT LEVEL. Is the Pound saying something about the outcome of Thursday’s vote?
“The Sterling dollar rate has mirrored the movement in the Brexit polls for the last year. The recent shift in favour of the Leave campaign and Sterling weakness shows that 1.4240 is the key Brexit level.” said Ed Matts, of research company MatrixTrade.com
Sterling touched a low of 1.4010 against the US Dollar on Thursday before tragic events in Yorkshire served as a catalyst in favour of the Remain Campaign. It opened sharply higher in Asia at 1.4460 following two weekend polls that gave the lead back to the Remain camp.
“Sterling has been tossed around like a cork on stormy waters the last few weeks as the polls have swung violently. But this four cent rally that started after Jo Cox’s tragic death anticipated this weekend’s polls and shows how important 1.4240 is to the markets.”
“Markets hate uncertainty so I strongly doubt this rally can be sustained before Thursday. But it will get very nervous and excitable if it goes below 1.4240 again.”
The chart shows a steady shift during 2015 in favour of leaving the EU was mirrored by a 10% decline in the value of Sterling against the Dollar but it also shows how in 2016 it has swung violently around but mainly above 1.4250.. the level where the LEAVE vote is seen to equal the REMAIN vote pollsters. There have been times when the market appears to have led the polls such as Thursday as traders saw events that could lead to a change in the polls.