No Brexit, GBP/USD to Rebound Strongly - BTMU
Analysts at Bank of Tokyo Mitsubishi explained that cable will rebound more strongly now if the UK votes to remain within the EU.
"According to Bloomberg’s FX forecast model & calculator, the market is currently attaching around a “1 in 3” probability that cable will record a 6% gain or a 6% loss over the next month. The pound is expected to move significantly both in the event of “Brexit” or “Bremain”.
Cable could rebound more strongly now if the UK votes to remain within the EU following the release of the shockingly weak US employment report for May.
We had previously assumed that the Fed would resume gradual rate hikes in July if the UK voted to remain within the EU helping to dampen cable upside, but that appears less likely now.
The Fed may prefer to wait until September allowing it more time to assess the health of the US economy before deciding whether it needs to resume rate hikes. In our latest forecast update we were already expecting cable to rebound towards the 1.5200-level equating to a gain of around 5%."