Jane Foley, Research Analyst at Rabobank, notes that the Sterling volatility has ramped up significantly over the past few weeks with 1 mth vol in EUR/GBP more than doubling over the past fortnight.
Key Quotes
“Given that opinion polls continue to indicate that the result of the UK’s June 23 referendum on EU membership could go either way, perhaps it is not surprising that levels of anxiety have soared.
Not only could a vote in favour of Brexit drive GBP significantly lower but it is likely to have a negative impact on the EUR and simultaneously drive-up demand for the safe havens JPY and CHF, both of which have risen in recent sessions.
It is possible that the greatest legacy of such a decision would be its impact on the cohesion of the EU. A study published by US Think Tank Pew Research highlights there is already significant opposition in key European countries to an ever closer EU.”
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