GBP: Relief rally? – Rabobank

By FXStreet Jane Foley, Research Analyst at Rabobank, notes that the GBP has made an impressive recovery vs. the EUR since early April, with the most recent gains finding incentive from the results of the UK opinion polls regarding the June 23 EU referendum.

Key Quotes

“Over the past couple of weeks opinion polls have been suggesting that the ‘Remain’ is extending its lead and that political uncertainty is thus subsiding.

The recent gains in the pound clearly limits the scope of a relief rally on a ‘Remain’ vote next month. That said, a clear victory for the ‘Remain’ vote is still likely to trigger a strong bout of GBP buying. By contrast a close vote is likely to be greeted with a more cautious reaction since it may signal that pressure for another vote in the next ten or so years could re-surface.

It may also leave open the risk that another European country could hold a referendum on EU membership over the next couple of years. This is a risk which could be detrimental to the outlook for the EUR over the medium-term. For GBP, a Remain vote on June 23, is likely to see focus quickly return to …read more

Source:: FX Street