Phone polls put Remain over the top
Opinion polls and London buses; none for an age and then three turn up at once. Sterling has taken a shot in the arm from the latest readings of the referendum tea leaves as two of the polls showed a decent lead for then Remain camp with the sole online poll predicting a win for the Brexit camp.
ICM’s phone poll was Remain 47%, Leave 39% while its online poll showed Remain 43%, Leave 47%. A separate poll by the Telegraph details that 55% now say they support Remain and 40% support the campaign to Leave.
We have long held the view that phone polling is more reliable and accurate than those done online; data from the previous 2 general elections and the Scottish referendum back this up but obvious risks remain.
But will they vote?
Much like the 2014 referendum on Scottish independence the key dynamic will be voter turnout with Remain voters 20% less likely to vote than those hoping the UK leaves the EU. Once turnover dynamics are applied across the UK the vote split very much falls into the margin of error – a statistical tie.
Such is the wide margin of error in these polls it is becoming increasingly likely that broadcasters will not run exit polls on June 23rd to give an initial snapshot of how the vote has gone once polling closes. This will likely mean a very volatile pound through the night as we wait on the official announcement from Manchester Town Hall at some point in the early hours of Friday morning.
More opinion polls are due as the week goes on. It may be overextending the bus analogy to say that these are the main drivers of sterling at the moment.
Inflation due at 09.30
For now GBP is higher and we turn our focus to the latest inflation numbers due this morning. Inflation has come higher in the past few months and we expect inflation to rise today with core prices providing most of the increase as oil and food markets remain spotty and unpredictable.
AUD battles back
Despite an interest rate cut at the beginning of the month, the minutes from the Reserve Bank of Australia meeting have been taken a little less dovishly than expected, aiding the AUD’s recovery. There was limited forward guidance within the release and market opinion remains split on whether this begins a series of additional rate cuts. Inflation is only calculated quarterly in Australia and so we may have to wait until August for the next loosening of policy.
The Day Ahead
US CPI is also on the data docket today with the USD under pressure yesterday through little fault of its own. A rebound in oil prices and global equities was enough to see some traders take off their USD shorts although a strong inflation reading today will have investors scrabbling for the USD.