Battle of Brexit Continues – 8th May 2016

Battle of Brexit Continues

Opinion pollsters are now showing that the Leave vote is now ahead while the bookmakers indicate a continuing lead for Remain. Many investors fall into the “Don’t Know” category, hence the volatility of Sterling in recent weeks. On Monday it was higher by 0.4%: yesterday it was down by 0.3%.

It left Sterling unchanged against Euro and lower against almost everything else. Sterling was a quarter of cent higher against the US Dollar but that is the only currency against which Sterling has gained ground over the last week.

Today EU and Japan have already released revised figures for first quarter GDP. The Japanese numbers met investors’ expectations, with quarterly growth of 0.5%, while the EU’s 0.6% expansion was fractionally bigger than expected. Both sets of data though were overshadowed by the World Bank’s latest Global Economic forecast which went something like this; “Growth prospects have weakened throughout the world economy.” Hardly ground breaking stuff and neither were the revisions to global growth forecasts: for 2016, 2.4% instead of 2.9%; for 2017 and 2018, 2.8% and 3% instead of 3.1% and 3.1%.

Today’s data highlights include UK manufacturing and industrial production and the Reserve Bank of New Zealand interest rate decision. The figures for UK production are not the easiest to forecast, so there could be some Sterling action at half past nine. As for the RBNZ, the assumption is that if it does not deliver a quarter-percentage-point rate cut on this occasion it will make the move after the next policy meeting in August. Were there to be no cut tonight, and no comment in the statement about one in August, the Kiwi could well move higher.