UK: Increasing Brexit risk weighing heavily on the pound - MUFG

Lee Hardman, Currency Analyst at MUFG, notes that the pound has weakened sharply alongside the US dollar undermined by the increasing perception of Brexit risk.

Key Quotes

“Three new online opinion polls released since late last week have revealed stronger public support for the UK to leave the EU. Online opinion polls held by YouGov and TNS revealed that the leave camp is now in the lead.

The Opinium poll still showed the remain camp in the lead but they stated that there would have been a majority for leave if it had not re-weighted its latest poll to reduce the impact of  a disproportionate number of socially conservative voters in its sample, something which it had not done previously. The results would carry even more weight if the increasing public support for leaving the EU was also replicated in the upcoming phone polls.

Still the online poll results have added to building evidence that the leave campaign has recently gained some momentum. The sharp weakening of the pound highlights that it will remain highly sensitive and volatile to perceived Brexit risk in the coming weeks ahead of the referendum.”