The UK pound to euro exchange rate fell to an eight week low this morning amid growing Brexit fears that Britain may well vote to leave the European Union. As of 09:00 GMT this morning, one UK pound exchanged 1.2595 euros, or 0.67% lower (GBP/EUR). The current 14 day average GBP/EUR exchange rate adjusts to 1.28.
The UK pound is still the worst performance currency in the G10 economies this year, as investors assess the risks of an UK exit from the EU as polls suggested both sides could still prevail. The day after next week’s referendum on EU membership, the UK pound will either sink or climb.
A survey by YouGov research for the Sunday Times newspaper showed 43% of UK respondents in favour of a so called Brexit and 42% for Remain. An Observer poll indicated 44% back Remain and 42 percent supporting Leave. On Friday a third poll of 2,000 people by ORB, commissioned by the Independent newspaper showed Brexit leading by 55% against 45%.
Meanwhile, The Opinium Poll, commissioned by the Brexit backing Bruges Group think tank, is further evidence that the Leave camp is gaining support and delivers the biggest margin of victory for Brexit so far, after giving voters the option of a choice of free trade agreements with the EU. It found 52% chose to leave the EU, with only 33% choosing to keep the status quo.
Despite there being less than two weeks before the crucial referendum, on June 23rd, a further 15% said they still didn’t know.
The pound and and UK stock markets could plummet by between 20% and 30% if the UK votes to leave the European Union, a leading research analyst has predicted. Ian Harnett, chief investment strategist at UK based Absolute Strategy Research also said that the UK pound could fall to parity with the US dollar if voters decide at next week’s referendum to ditch the EU.
“It would appear that the continued hyperbole of both campaigns, along with the daily dose of claims of financial apocalypse appear to be getting tuned out as voters tire of the slow drip of absurd claims by various politicians from both sides of the debate.” said Michael Hewson, chief market analyst at CMC Markets.
“I would expect volatilities to rise further and the markets will become even bleaker as we head towards the referendum.” said Koichi Yoshikawa, executive director of finance at Standard Chartered Bank.
UK Pound to Euro Brexit Forecast
Danske Bank have recently told their clients ahead of the referendum vote that the range for GBP/EUR currency pair is estimated at 1.3158 (GBP/EUR) in case of the UK remaining, which is Danske’s official forecast, and GBP/EUR 1.11 in case of a Brexit. As such, the risks are heavily skewed towards a weaker UK pound heading into the UK’s EU referendum.
There continues to be a huge amount of uncertainty with the UK’s EU referendum less than two weeks away. Brexit aside, markets will be watching the US Federal Reserve in the coming week to figure out whether the Fed is looking to raise interest rates any time soon.
The outcome will impact direction in the world’s largest currency, therefore influencing major pairs like GBP/USD and EUR/USD through to the price of commodities and movements in stock markets.