The main event today and potentially the main event this year is the UK’s EU Referendum. Throughout today the UK general public will be casting their votes on whether to remain in or leave the EU. At 10:00pm BST the votes will be counted and declared from the 382 centres, before being collated and once again declared by 12 regional centres. The referendum is set to be concluded by 7:00am BST on June 24 with the official verdict being announced at Manchester Town Hall.
Yesterday’s late NY session provided two polls showing a lead to the ‘leave’ camp. Opinium at 45/44 and TNS at 43/41. This saw some downside in sterling with GBPJPY dropping 170 pips. The fall however was surprisingly small given the massive recent rise is pound. Two more subsequent polls showed ‘remain’ in the lead which saw GBP take out the recent highs and GBPJPY rally 285 pips from retracement low. ComRes 42/48 and YouGov 49/51. The reaction to a ‘remain’ lead appears to be much more influential and this shows that the market is dangerously pricing out the risk of a ‘leave’ outcome.
Cable is now higher than the price it was at prior to the announcement of the referendum. Betting odds are placing approximately 70-80% chance of the UK voting to remain in EU. However many investment bank and statistics agencies meta-analysis have the total polls close to neck-and-neck with remain holding a modest and non-significant lead. The more GBP rallies ahead of the result, the higher the chance of a drop either on a ‘leave’ win or still even on a “buy the rumour, sell the fact” type trade on a ‘remain’ win – however timing this fade entry will be critical.