The Pound Sterling edged lower today as investors sought safe haven currencies as uncertainty grows regarding the upcoming referendum which will decide whether Britain remains in the EU or leaves it. In the 5-month period spanning mid-November through mid-April, the Pound has lost nearly 10% on a trade-weighted basis, primarily on those concerns. Since then, the Pound has been able to recoup about 3% but it remains under heavy pressure as investors weigh the latest polls. The largest fear is that if the vote is to leave the EU, there will be a very large gap in the current account that could be difficult to fund.
As reported at 10:56 am (BST) in London, the EUR/GBP was trading at 0.7855 Pence, a gain of 0.03% while the GBP/USD was down 0.37% at $1.4463. The GBP/JPY was down 0.80% to trade at 153.9550 Yen; the pair has ranged from a session low of 153.65 Yen to a peak of 155.3006 Yen.
Economic News Not Impacting GBP
Given the worries over the possible Brexit, economic news has had less of an impact than it normally would. The latest news showed a large increase in exported goods which set a new monthly record, and that the April trade deficit narrowed. Nonetheless, that good news had little impact on the Pound Sterling. One currency strategist believes that because the market’s appetite for risk is waning, the environment is favoring the safe havens and will likely continue to do so in the coming weeks.