High Low     High Low
EUR/USD 1.1141 1.1114   USD/ZAR 15.75 15.66
GBP/USD 1.4501 1.4449 GBP/ZAR 22.83 22.64
EUR/GBP 0.7704 0.7668 USD/RUB 68.38 63.42
GBP/EUR 1.3041 1.2980 USD/ILS 3.8609 3.8411
USD/JPY 110.83 109.64 S&P 500 2101 2090
GBP/CHF 1.4416 1.4354 Oil (Brent) 49.93 49.25
GBP/AUD 2.0044 1.9842 Gold 1220.0 1210.0

The EU Referendum is starting to play havoc with the GBP as you no doubt have seen. Last week the REMAIN camp opened a 65-35 (in/out) lead sending the GBPUSD to 1.47, then yesterday another “poll” saw the OUT camp open a 7 point lead sending the GBPUSD to a low of 1.4449. Seriously, can one really take these polls seriously? How can there be such a swing in such a short period of time. Granted some 18 migrants were rescued in the English Channel but was it that news that sent people voting REMAIN to change their minds and vote OUT. Makes little to no sense to me and why I refuse to take these polls for anything more than they really are, polls. Keep in mind that poll could have been taken in an area where the LEAVE camp dominate and thus portrays the country as suddenly switching sides and voting OUT. We have noted several times that between now and 23rd June the markets with be extremely jittery and prone to large moves on the back of polls and comments by the different protagonists.

Look, let’s be honest regardless of whether your support REMAIN or LEAVE, there are solid arguments that favour each camp and which are indisputable. Facts are facts and you cannot tweak them regardless of how hard you try. What we do know is should we stay the financial markets will breathe a sigh of relief, the UK will continue to have access to 500 mio people in the EU, you and I can travel East and find a job and settle easily, and the USA will not put the UK at the bottom of their trade counterparts, oh and the ECB will be delighted tooJ. Then the argument for the LEAVE camp, migration. Let’s be honest, that is an issue and one which was on the Conservatives (and Labour) manifesto during the last election. But you can argue that Greece, Spain, Italy, Germany and France have bigger problems with the number of migrants arriving on their shores. Yes there has been talk that 12 mio Turks will move to the UK when they get EU membership….seriously are you really going to believe that. I have been to Turkey, they have lovely weather, a pretty good economy and a pretty good place to live. 12 mio people….yeh right.

China manufacturing PMI came in at 50.10 – same as last month. Happy days, China’s economy is bottoming out. Well we hope at least. With Chair of the FED Yellen’s comments Monday night that the FED are lining up 2-3 hikes this year (seems they also think the global economies have bottomed out and things will only get better from here) the market was caught sleeping (including me). I thought June or July followed by December at best. Her comments seems to indicate June, July and December hikes taking the rate to 1% by year end. I hope she is right, because from what I have seen the US economic data does NOT confirm her comments….which is odd considering she noted further rate hikes are data dependent. NFP on the 6 May certainly didn’t help (+160k vs +215k previous), so I hope the statistics improve this Friday.

The USD on the back of these comments has enjoyed a rally and if we do indeed see a SUPER NFP number this Friday, I think you will see the USD break through EURUSD 1.10 (which of course will add extra pressure on the GBPUSD and potentially GBPEUR). Time will tell how solid the US economy is and whether she was spot on raising rates 3 times in 2016.



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