Britain’s have begun streaming into polling stations on what promises to be a historic day no matter the outcome. Voters will be voting on whether the UK should remain in the EU or not. The vote has been widely covered as the lead up has caused several a stir in markets, with any and all data relating to the vote being hungrily priced in by market participants. Since last week, markets have been bullish ‘remain`, placing bets that would benefit if the UK remains in the EU which has seen sharp increases in the GBP crosses and sell offs in safe haven assets such as gold which has slid over 50 USD since last week’s change in optimism of a united EU.
As it stand bookies have the UK remaining in the EU with several thousand bets and several millions in currency being placed. The bookies have the odds of a remain at 2 to 1 against an exit but what you need to be aware of is that this is determined by the amount of money bet and not the number of bets being placed, when we look at the number of bets being placed, we have a strong skew towards a leave being priced in.
The latest polls by various sources have initial sent the GBP rocketing up yet again this morning as they show voters leaning towards a remain, but this was quickly counter balanced by other polls showing the exit voters outweighing the remains. Below is the latest poll results from 4 sources:
As a recap, should the UK voters opt to stay in the EU, experts expect the Pound and EUR to strengthen with the POUND likely to outpace the EUR gains as it is expected to appreciate by roughly 5 to 10 % in the wake of a remain vote. Safe haven assets, which have seen a rise leading up to the vote, will be sold aggressively as we see the JPY and Gold depreciate significantly. However, should the UK vote to leave the EU, we would expect the Pound and EUR to weaken across the board with some analysts predicting a drop of between 10 to 15% in currency values. While it is expected that money will flow into safe haven assets such as GOLD and the YEN boosting both as investors look for a safe place to park their money.
One thing is for sure, whatever the outcome, extreme volatility and profit opportunities will present themselves from the time leading up to the vote and till the end of the week and month as the vote outcome is digested by markets.
Other important economic date being released today are as follows:
- EU Flash Manufacturing PMI expected at 51.4
- EU Flash Services PMI expected at 53.2
- Long Term Refinancing Option previously at 7.3B
- RBA Assistant Governor Debelle speaks
- Unemployment Claims expected at 271K
- New Home Sales expected at 561K