Tuesday, 24 May 2016

Sterling boosted by another 'Brexit' opinion poll

Sterling has risen higher today, back above €1.30 against the Euro. Again it's the referendum, and a new poll showing support for the 'Remain' campaign that has lifted the Pound. Here's the GBP/EUR chart for the week so far:


As you can see we're back up to the highs of last week, which are the best GBP/EUR for around 4 months. The latest Poll was from the ORB and published in the telegraph today. This showed that there is now a 13 point lead for the 'Remain' campaign. The Pound had weakened this year due to the uncertainty and risk aversion a Brexit would cause, and now that's looking less likely, Sterling is starting to strengthen again.

One thing that is very interesting is the demographics. I saw on the BBC news last night that amongst 18-24 year olds, 72% are predicted to vote to remain within the EU. When you look at those aged over 65 however, there is a stark difference. 58% of this group are likely to vote leave. So those that have never known any different want to keep the status quo. Those that remember voting for the common market have very different views. The graph below shows the currency split amongst the various ages, genders, and social grades:



What's important here is that the older generation are much more likely to actually go and vote, so despite the polls suggesting we will remain, if the 18-24 year olds don't actually go to the polling stations on the 23rd of June, we could well end up leaving the EU. I pointed out in a post last week that polls are also very unreliable. In the General election a year ago, they all predicted a hung parliament, yet the Conservative party won by a clear margin.

There is no way to predict which way things will go, and you should have a strategy in place if you need to convert currency in the coming months. Simply watching the rates and hoping things will move in your favour could prove costly if the rate moves the wrong way.

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