Daily Market Report 17/05/16

GBP

There was more discussion surrounding the Brexit yesterday with the release of the results by a poll conducted last week. The "remain" camp held an eight-point lead over its "leave" rivals in Britain's EU referendum campaign, according to the latest telephone poll from ICM for the Guardian newspaper, published yesterday. The poll found that support for remaining in the union stood at 47 percent, whilst that for the so-called "Brexit" option was at 39 percent and 14 percent were undecided.

There has been a long-running trend in opinion polls on the EU referendum issue whereby telephone polls have tended to find a comfortable lead for "remain" while online polls have suggested a closer race, with "exit” in some cases. The entire British polling industry failed to predict the Conservative Party's outright win in last year's general election. This illustrates the unreliability of the polling system.

Chancellor George Osborne attacked pro-Brexit campaigners for saying Britain should not just leave the European Union but also its single market, as he sought to convince voters that the economy faces big risks in next month's referendum. Osborne said Britain would lose 200 billion pounds ($287 billion) a year in trade in 15 years' . Osborne  said "Leaving the EU is a one-way ticket to a poorer Britain, this was reiterated by the head of airline Ryanair who said his firm could lower investment after an "Out" vote. 

The Confederation of British Industry (CBI) cut its economic growth forecasts, citing the approach of the European Union referendum. Retailers and pay experts also pointed to a subdued outlook in other reports published on Monday. Uncertainty is looming over global growth, particularly around weakening emerging markets and the outcome of the EU referendum, which Carolyn Fairbairn CBI'S general director  said is "chilling some firms' plans to invest,"

The CBI said it now expected Britain's economy to grow by 2 percent a year this year and next, down from forecasts of 2.3 percent and 2.1 percent made in February and below the long-run average. It based its forecasts on an assumption that Britain would stay in the EU.

This also echo’s the Bank of England’s recent reduction in growth forecasts on Thursday to 2.0 percent growth this year and 2.3 percent in 2017 and said the economy would slow more sharply, and possibly even go into a short recession, if Britain votes to leave. 
 

Key Announcements

09:30 – GBP: Core consumer Price Index YoY(Apr) Expected to stay the same at 1.5%

10:00 – EUR: Trade Balance (Mar) expected to increase from 19.0B to 22.5B

13:30 – USD: Consumer Price Index (Apr) expected to increase from 0.9% to 1.1%