The end game approaches

Markets appear to be free-wheeling into the end of the week as they await the results of the UK’s EU referendum results on Thursday. The issue came up again at Yellen’s testimony on the economy yesterday, with the message largely unchanged from that delivered in the wake of the FOMC meeting last week. So we’re at a stage where policy-makers globally appear to be stalled ahead of the results. Sterling has been steadier after Monday’s surge, with the 1.47 level appearing to be the short-term resistance level. Still, owing to the binary nature of the result, the scope for volatility remains, but given the way things have gone, the market is positioned for a stronger reaction from a vote to leave vs. a vote to remain. The correlation of sterling to the change of remaining as expressed in composite betting odds has been increasing aggressively of late, now near 0.80 on a 2 week rolling basis, from near to zero towards the end of May.

For today, we’re likely to see this steadier tone continue. Sterling is likely to struggle for further gains unless we see a significant change in the polls which appears unlikely at this point in time. The data calendar is on the light side, with just US consumer confidence and existing home sales data later in the day

Did you know?

Papyri PCZ I 59021, which dates back to 259/8 B.C., shows the exchange of coinage in ancient Egypt.

Word of the day
"Risk Capital" - The capital that a trader can invest without being significantly affected in the event of loss.
Pro Tip

Always check transaction costs before opening an account (and keep in mind that cheap rates are no guarantee of reliability).

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