Earlier yesterday Sterling climbed to its highest since early January against the dollar after opinion polls suggested the campaign to keep Britain in the European Union was edging back into the lead. The implied probability of a "Remain" vote in Thursday's referendum was around 76 percent, up from as low as 60 percent last Thursday, according to odds from gaming website Betfair.
However in the afternoon Sterling pulled away from a 5-1/2-month high against the dollar on Tuesday after a poll showed the campaign for Britain to stay in the European Union has lost some of its lead ahead of Thursday's referendum on EU membership.
The telephone poll, which was conducted by Survation for spread-betting firm IG on Monday, put support for "In" at 45 percent, ahead of "Out" on 44 percent, IG said. Survation's previous survey, published late on Saturday, had shown "In" on 45 percent, 3 points ahead of "Out".
Britain’s economy will particularly vulnerable to any pull-back investment flow if they decide to leave the EU, this is due to Britain’s hefty current account deficit. But while polls continue to show the outcome of the referendum as too close to call, bookmakers and online betting exchanges - closely watched by investors - are more confident, offering odds implying around a 76 percent chance of a vote to stay in the EU.
A vote to leave would trigger a more disruptive sterling devaluation than its decline in 1992, said George Soros. Soros said the pound would fall at least 15 percent and possibly more than 20 percent, to below $1.15, if Britain opted to leave.
Global risks and a U.S. hiring slowdown warrant a cautious approach to raising interest rates as the Federal Reserve looks for confirmation that the country's economic recovery remains on track, Fed Chair Janet Yellen said on Tuesday.
Yellen outlined how the central bank was thrown off course within weeks of raising rates last December by a slowdown in domestic growth and international events, including concerns over China's economy and a further collapse in oil prices.
Before a further tightening of monetary policy, she said, the Fed needs to be sure U.S. economic growth and hiring have rebounded and there is no shock from the outcome of Britain's June 23 vote on whether to leave the European Union.
With a weak global economy, low U.S. productivity and other factors holding down interest rates in the long run, Yellen said the Fed's benchmark overnight interest rate is likely to remain low "for some time."
Current Fed policymakers' forecasts foresee two rate increases this year and three each in 2017 and 2018, a slower pace from their projections in March.
Mario Draghi spoke at the Committee on Economic and monetary Affairs at the European Parliament. Draghi stated that “the recovery of the Euro area economy gained momentum at the start of the year” and “it is expected to proceed at a moderate but steady pace.” He also suggested that “further monetary policy stimulus is in the pipeline”. Current measures Draghi argues, “been instrumental in putting the recovery on a more solid footing and thereby securing the conditions for inflation to rise towards levels closer to 2% over a not-too-distant horizon”. Going forward, the message was that “efforts should now concentrate on strong policy action to improve the business environment, favour investment and raise productivity”.
USD - 15:00: Janet Yellen Testifies on the Semiannual Monetary Policy Report before the Senate Banking Commitee