Sterling higher despite Brexit concerns

Monday, May 02 2016

There were no data releases from the UK today, with banks being closed in observance of May Day holiday. Gains in the pound were capped, though, after a YouGov poll for the Times showed opponents of Britain’s European Union membership edging into the lead in the run-up to a June 23 referendum on the issue, despite an intervention on the “In” side by U.S. President Barack Obama. The online survey, taken on Monday and Tuesday, showed support for the “Out” campaign had risen 3 percentage points to 42 percent since a similar survey on April 12-14, while the number of undecided had fallen, leaving support for the “In” campaign up 1 percentage point at 41 percent.

Despite the poll, bookmakers’ odds have consistently shown a vote for “Remain” the most likely outcome of the ballot, with betting website Betfair putting the chances of a Brexit at around just 30 percent. Those odds, closely watched by investors, have lent support to the pound. The UK unit continues to be buoyed by opinion polls suggesting that the ‘Remain’ campaign is beginning to pull out a meaningful lead in the EU In / Out referendum debate. This morning’s government figures which revealed that the pace of expansion in Britain’s money supply slowed last month are unlikely to help the Pound in the short term.

Sterling is currently being traded few points above 1.4660 level. Pair is likely to find support around 1.46 handle and resistance above 1.47 level. Later today, in the US session, ISM Manufacturing PMI figures will be published.

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