The roller-coaster ride that is the GBP went up again as recent Brexit polls show a stronger preference towards Britain staying in the European Union; this time to the tune of 1.8 percent. This increase, added to a 1.1 percent gain on Friday, makes this rally the pound’s largest since 2008.
The most likely reason for the pendulum swinging to the “stay” direction is the recent murder of Jo Cox, a political leader who spoke loudly about Britain staying with the EU. While both sides of the decision agreed to stop campaigning out of respect, it’s being widely reported that the murder garnered sympathy for the stay camp.
This is a victory for the stay camp, but it may just be a temporary one as poll numbers continue to come in.
“Polls over the weekend helped, but it still seems 50:50,” said Stuart Bennett, head of Group-of-10 currency strategy in London at Banco Santander SA. The pound “could drop strongly if next poll shows ‘Leave’ maintaining last week’s figures.”
A Global Impact
It wasn’t just the pound that saw an increase either. Britain is an economic powerhouse, and a decision to stay in the EU allows the rest of Europe to lean on that economic power. The longer the polls indicate a decision to stay, the more confident the rest of the world is in other European currencies.
Kathleen Brooks, a London-based research director at Gain Capital Holdings Inc., said “The markets have always been more comfortable with the U.K. remaining in the European Union, hence the boost to risk sentiment now that the ‘Remain’ camp’s campaign appears to be back on track.”
Here is a list as to how the rest of Europe fared over the weekend against the USD:
The Euro rose a half a percent, the most in the last two weeks
Both Norway and Sweden’s currencies rose over one percent
Aussie and Kiwi rose almost and entire percent
The Polish zloty rose .8 percent
The only major currency that didn’t see a rise against the dollar was the Japanese yen, which fell by only .3 percent.
As good as these numbers look, they’re still fickle. The polls have shifted before, and they likely will again. All that’s guaranteed is that once the vote happens on Thursday, it will have MAJOR market implications.
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