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Pound likely to be choppy on Brexit uncertainty

Monday, Feb 08 2016
Sterling traded below a recent one-month high against the dollar on Monday, as uncertainty about Britain's place in the European Union and diminishing rate hike prospects kept investors cautious."There are still concerns about slowing economic momentum in the United Kingdom, while ongoing uncertainty over whether there will be a Brexit referendum to vote on UK membership of the EU should continue to haunt investors."
 A YouGov poll released late last week showed those campaigning for Britain to leave the European Union had taken a nine-point lead. The poll showed 45 percent of Britons would vote to leave the bloc compared with the 36 percent who want to remain. Nineteen percent said they did not know or would not vote. Markets and punters are betting that the referendum is likely to be held in June.
 
Traders expect uncertainty stemming from the referendum to keep the pound choppy in the coming months and possibly force the central bank to keep rates lower for longer. Most economists think Brexit would hurt growth in the short-run -- Citi predicts a 4 percent hit over three years.
 
Sterling is currently being traded around 1.4480 handle. Pair is likely to find support around 1.44 handle and resistance above 1.4550 level. There will be no major data releases in the rest of the session.
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