The Pound Sterling firmed against the US Dollar in Monday’s trading in Europe after seeing a 1% rise last week. With a public referendum looming, FX traders are still wary that Britain could pull out of the European Union. In fact, David Cameron, the UK Prime Minister and George Osborne, Finance Minister and the Chancellor of the Exchequer, are both campaigning hard to stay, recently taking their argument to the UK Parliament. The latest polls have the “in” camp, i.e. those in favor of staying, taking the lead by about 7/2 odds. That news, coupled with an unexpectedly upbeat retail sales report for last month, has helped drive the Pound broadly higher.
As reported at 11:00 am (BST) in London, the GBP/USD was trading at $1.4991, down 0.11%; the pair has ranged from $1.4483 at the low end of the range to $1.4548 at the high end. The EUR/GBP is flirting with the opening price at 0.7733 Pence, a gain of 0.01%; the pair’s daily trading band is at 0.7705 Pence at the lower end and 0.7756 Pence at the high end.
Sterling Remains Vulnerable
Despite the latest news, currency strategists see vulnerability ahead of the Pound Sterling over the next few weeks. One strategist says that once reality sets in, FX traders will easily find evidence that the rift between the “stay” and “go” camps is not as wide as first thought, thus the outcome will be vulnerable to a rise in voter turnout. The main currency that investors have is that a “go” would further damage the UK economy, especially ballooning the trade deficit and the country’s current account deficit.