Research Team at Danske Bank, suggests that with less than two weeks to referendum day, it is no longer possible to register as a voter (the deadline was extended to midnight on Thursday as the website crashed on Tuesday) and both camps have intensified their campaigns.
Key Quotes
“Recently, TV channels have aired several EU programmes including debates among leading politicians, which could potentially affect the referendum outcome as recent opinion polls have shown there are still many undecided voters.
We plan to monitor the coming opinion polls closely for any new trends. Until last week, most opinion polls had ‘remain’ ahead (although not by much or necessarily statistical significantly) but it is not over yet. At this stage, we cannot say what the outcome will be. Betfair’s implied probability of a Brexit is currently 27.4%.
GBP risk premiums in the FX option market increased further last week while EUR/GBP was little changed following the recent repricing of Brexit risks. As such, opinion polls are likely to continue to be pivotal for pricing of GBP assets in coming weeks. We expect volatility to remain high and see risks skewed towards a weaker GBP ahead of the referendum as Brexit uncertainties are likely to remain intact.
What to watch this week
We expect the Bank of England meeting to be a non-event as the central bank has repeatedly indicated it is side-lined until after the referendum.
In terms of data releases, this week’s schedule is very busy. The most important release is Wednesday’s April labour market report. The labour market cooled in Q1, in our view partly reflecting delayed hiring due to Brexit uncertainties. The question is whether this slowdown has continued in Q2, when growth based on data released so far seems to be better than in Q1.”
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