British Pound Soars on New Evidence of Conservative Voter Swing to 'Remain' + Bank of England Rate Hike Talk

Another poll has confirmed an emerging trend that could ultimately settle the impending referendum on UK membership - providing further support to the GBP.

• Remain vote solidifies
• Bank of England's Mark Carney confirms rates likely to rise following a Remain vote, stokes GBP buying

The pound exchange rate complex is pushing higher once more as another poll on voting intentions in the June 23rd EU referendum confirms a further crystallisation in the Remain vote.

A new poll conducted by ORB International for The Telegraph shows Brexit is, “looking progressively less likely as more voters are deciding to vote ‘Remain’ on June 23rd.”

When asked how they intend to vote on June 23rd, 58% answered that they would vote to remain in the EU, a clear lead over the 38% who would vote to leave. 4% remain undecided.

"On this basis we continue to see the risks of an unexpected EU exit on the decline, to below 20%. Indeed as we move inside a month from the poll the greatest enemy of the remain campaign could prove to be voter apathy, leading to a low turnout," says Jeremy Stretch, analyst with CIBC Markets.

Latest Pound/Euro Exchange Rates

	Live: 1.1455▲ + 0.1% 12 Month Best: 1.2162
*Your Bank's Retail Rate	1.1066 - 1.1111
**Independent Specialist	1.1295 - 1.134 Find out why this is a better rate

* Bank rates according to latest IMTI data.

** RationalFX dealing desk quotation.

 

Of note, the majority of those Conservative voters ORB International spoke to appear to support David Cameron’s stance on the EU, with 57% saying they will vote to remain in the EU on the day.

This confirms a trend first flagged up by an IPSOS Mori poll from Wednesday 19th May which confirmed a swing amongst Conservative voters to the Remain cause.

The pound rallied sharply on the back of the IPSOS Moril result, with price action in the wake of the ORB poll echoing the moves:

• The pound to euro exchange rate was seen higher by 1.28% reaching 1.3076
• The pound to dollar exchange rate was seen higher by 0.9% having reached 1.4613
• The pound to Australian dollar was up by 1.8% having reached 2.04

The pound is now at its best exchange rate against the euro since February the fourth while managing levels last seen against the dollar a week ago.

Against the Australian dollar we are seeing the best rates since February the 15th.

Concerning the outlook, CIBC's Stretch says should we see EUR GBP trade through 0.7649 lows expect that to support GBP USD, in the process opening up a test of 1.4640.

"In the near term if we are to continue to see GBP upside, on reduced Brexit fears, we would prefer to play that via EUR GBP downside rather than attempting to chase GBP USD through 1.47 and towards the 200-day MAV at 1.4781," says Stretch.

Bank of England Open to Interest Rate Rises

Adding fuel to the GBP rally was the Bank of England’s Governor Mark Carney who appeared before the Financial Select Committee in the Houses of Parliament to answer questions on the Bank’s latest Inflation Report.

Carney noted he doesn't share the Treasury's views on inflation and if the U.K. votes to remain in the EU, the next move for rates should be up.

The promise of higher interest rates should attract inflows of foreign exchange for global investors hungry for returns in a low yield world.

The Bank’s Martin Weale, also at the hearing, expressed surprised that wage growth has not picked up in the past 18 months.

“This observation along with the continued warning of Brexit risks should limit the upside in GBP and continue the rollercoaster ride for the currency,” says Kathy Lien, analyst at BK Asset Management.