Scope for Volatility in GBP in the Run Up to Referendum Day
May is likely to prove a challenging month for markets with a number of risks events in store, including the Fed monetary policy meeting on June 15th and the UK referendum on June 23rd. Both the events have the potential to cause major market dislocation.
Pound sterling has indeed seen some gains in May when a relatively benign backdrop saw stocks and the dollar rise. Most equity markets started this month on a weak footing, slipping into the red on weak Chinese PMI data and a falling oil prices. The dollar index also slips lower from 2- month highs of 95.97 on May 30th.
Opinion polls now show a move towards the ’Leave’camp and probability of a very close vote. However, markets have yet to come anywhere near pricing in a vote to leave, leaving plenty of scope for volatility in the pound. Opinion polls likely to continue to impact the Sterling in the run-up to referendum day.
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