by Jonny Harris
In the UK this weekend a poll has changed the views on the UK referendum and it now looks just as likely that we are going to leave the EU as it does that we are going to stay. A near 4% sway in the votes from this time last week has left the pound in a sticky situation and the rates have fallen across the board, reflecting the swing. If we were to leave the EU at the end of the month, the rates could fall well into the low teens rather quickly! The bank of England has said that uncertainty surrounding the referendum vote is dampening UK growth, while global institutions including the IMF and the Organisation for Economic Corporation and Development are warning of a dire fallout if Britain votes to quit the EU. I would advise that people read deeply into the referendum and make their own minds up and not be easily influenced by the scare mongering that is currently going on, as it will have an impact on us as a nation which ever way the final poll goes at the end of the month.
Friday’s weaker than expected non-farm payrolls hit the US dollar hard. The weakest increase month on month since 2010 saw the US fall across the board. We expected to see an extra 160k jobs which was an improvement on last month but not quite as high as the figures seen earlier in the year. The average for Q2 is far lower than that of Q1 and would take a miracle to get back to the levels of Q1. A disappointing release in the Unemployment rate also impacted the dollar which hasn’t recovered.
A relatively quiet day in the Eurozone today but the damage has been done this morning already seeing GBPEUR hitting a 3 week low. German factory orders declined the most since October last year in the early mornings release seeing the euro fall slightly. What looked to be a good start to the day for the pound, quickly changed as French Retail PMI improved.
Morning Market Rates