Investors’ concerns that Britain could leave the EU are becoming widespread and impacting the Pound Sterling which hit a 3-year trough against the safe haven Japanese Yen. In less than two weeks, voters will decide the fate of Britain’s future and several pollsters are now putting the “leave” camp in the lead. The greatest concern with a leave vote is the immediate impact it will have on the UK economy as well as the longer term ramifications of such a move. Initially, Brexit concerns were isolated to primarily affect the Pound Sterling, but analysts point out that the growing likelihood of a departure and the residual fear is now impacting other currencies.
As reported at 10:42 am (BST) in London, the GBP/USD was trading at $1.4132, down 0.76%; the pair has ranged from a session trough of $1.4115 to a peak of $1.4239. The EUR/GBP is up 0.89% at 0.7970 Pence, not far from the daily peak of 0.7986 Pence. The GBP/JPY is down 1.62% to 149.6250 Yen; the pair has ranged from 149.4750 Yen to 151.81 Yen in today’s trading session. The Yen is also moving higher against the US Dollar and earlier had touched a 6-week peak; the USD/JPY pair is trading lower at 105.89 Yen, down 0.85%.
Dollar Pressured ahead of Fed Meeting
The US Dollar is also under some pressure as the Federal Reserve’s 2-day policy meeting begins tomorrow. Given the latest rhetoric from members of the FOMC and, in particular, from the Chairman Janet Yellen, analysts and investors are expecting a rather dovish outcome. Speculation that a rate hike could be imminent has been diminished, with a more probable chance of that occurring much later in the year, if at all.