Brexit poll sparks FTSE sell-off

•       FTSE attempts to break out of range
•       ICM poll sends sterling and FTSE lower
•       US data support summer rate hike

What looked like a boring day in the markets has been kicked into gear as the European indices fell sharply after a surprise EU referendum poll in favour of the ‘leave’ campaign. Most notably, with the FTSE attempting to break out of its 30 point range that has dominated the past week, this could set the groundwork for a very volatile week. Today has seen a substantial amount of data released, and with a whole week of economic data risk ahead, traders will be wary of increased unpredictability in the coming days.

Another day, another EU referendum poll. However, this time it was different, with the ICM phone poll providing a big swing in favour of the ‘leave’ campaign. Widespread selling for sterling and an immediate flight to safety signifies the fact that markets have been caught napping with an overconfidence that every poll would come out in favour of the ‘remain’ campaign. However, it is worth noting that ICM surveys typically do favour a Brexit, with phone polls often coming out more heavily on the ‘leave’ side too. As such, while this will be a worry to some, the real test is whether the likes of the Ipsos MORI or ORB polls can be turned around. With IG clients currently showing a 77% chance that the UK will remain within the European Union, it is clear that today’s poll may be an outlier rather than the average.

At a time when markets have been seemingly focusing on the positives of a stronger economy rather than the looming possibility of a rate hike, today’s data highlights the fact that while a hike is likely, consumers may not feel so optimistic. Today’s rise in the Fed preferred core PCE measure of inflation paves the way for a potential hike in the summer, yet with consumer confidence on the wane, it is clear the everyday person is not looking forward to the prospect of higher rates.