A latest survey showing that Vote Leave is points ahead dragged the British pound to 1.41 cents against a stronger US dollar. As the EU referendum approaches, the sterling is swaying nonstop due to voters’ sentiment and the release of poll results after another.
TNS revealed yesterday that 47 percent of respondents wanted the UK to leave the EU, while only 40 percent wanted to remain a member of the bloc. GBP/USD fell to two-month lows.
UK inflation in May was also on the red, printing only a 0.3 percent rise, similar to the same period last year. Analysts were expecting a 0.4 percent growth. In m/m terms, CPI also disappointed as it climbed by 0.2 percent, missing the forecasted 0.3 percent. Transport costs rose by 0.9 percent in Mayi from the previous month but was offset by declines in food and clothing.
As we predicted, CPI didn’t have significant effect on the sterling especially because a Brexit poll was released in the same day. The Bank of England’s decision on its interest rate is next on the GBP’s economic headline.
The USD performed slightly stronger than its counterparts with the release of positive retail sales which hit 0.5 percent m/m against a 0.3 percent forecast. Core retail sales was in line with expectations at 0.4 percent. Both exports and imports at 1.1 percent and 1.4 percent respectively eclipsed their forecasted rates.
Atlanta Fed upgraded its GDP forecast for Q2 to 2.8 percent from an initial estimate of 2.5 percent. Strong retail sales was also viewed as a signal that consumer expenditure will most likely print robust numbers.
We are looking at an immediate support of 1.4089 and 1.4040 subsequently, while resistance is at 1.4265 and 1.4350. The MACD indicator is in negative location. The spot exchange is at 1.4142 and rising.