Daily Market Report 14/06/16

GBP

The pound fell to two month lows against the dollar on Monday and hit multi-year lows against the yen as worries over a U.K. referendum on European Union membership next week took hold. Sterling has sold off in recent sessions amid fears that a U.K. exit  from the EU could trigger a period of uncertainty in financial markets and hit growth in the region. The latest ‘poll of polls’ shows British voters are evenly split. Run by NatCen Social Research, the comprehensive study takes into account the average of the six most recent surveys, carried out between 1 and 10 June.

Results from the latest surveys suggest that exactly 50 per cent support Brexit and 50 per cent would like the UK to remain in the bloc. Individually, three of the six polls give Brexit a lead, while three give Remain the lead. According to a Bloomberg survey of economists, June 24 is likely to see further big swings in the currency. The day after the referendum, the pound will either sink to the lowest level in more than three decades or climb toward the highest this year. U.K. 10-year bond yields fell to an all-time low yesterday, as growing anxiety over the prospect of the U.K. exiting the European Union left investors scrambling for safe haven assets. 10-year bond yields fell 2.6 basis points, or 2.11%, to trade at 1.209% after hitting a session low of 1.206%, the lowest level on record.
 

USD

The dollar held steady at one-week highs against other major currencies throughout yesterday as investors remained cautious ahead of the Federal Reserve’s monthly policy meeting this week. Markets have pushed back expectations on the timing of the next rate hike by the U.S. central bank after a disappointing U.S. employment report for May, which showed the slowest rate of jobs growth since September 2010.

Key Announcements

09:30 – GBP: Core Consumer Price Index (YoY) (May) Expected to rise to 1.3% from 1.2%

09:30 – GBP: Consumer Price Index (YoY) (May) Expected to fall to 0.4% from 0.3%

13:30 – USD: Retail Sales (MoM) (May) Expected to fall from 1.3% from 0.3%