Are British Polls and the British Pound Telling 2 Different Stories?
Why the Upcoming Brexit Referendum Is Causing More Volatility
Why there will be a British referendum
The United Kingdom Prime Minister David Cameron has scheduled a referendum to be held on June 23, 2016, to decide whether Britain (EWU) should remain in the European Union (EZU) (FEZ).
A recent poll published in the Financial Times showed that 43% of respondents would vote for remaining in the European Union, 41% would vote for leaving the EU, and 16% were undecided. The poll suggests that the percentage of citizens who want to remain in the European Union (HEDJ) is a little higher than those who want to leave the EU.
Why the British pound is so volatile
Since February 22, the day when the referendum was scheduled, the volatility in the British pound has been increasing. The British pound tumbled 2.3% to a seven-year low against the US dollar (UUP) on that day. The pound also weakened against other major currencies as investors pulled out money due to rising uncertainties. The pound has been jittery since the declaration of the referendum.
Apart from the British pound, the euro also came under pressure against other major currencies. In an already weak European economy, investors are worried that Britain will make its exit.
In the next part of this series, we’ll analyze what markets can expect in the period leading up to the UK referendum.
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