GBP/USD Monthly Fundamental Forecast – May 2016

The GBP/USD made a spectacular recovery this month to close at 1.46030 seeing a gain of 1.68% for the month. Disappointing data was offset by a surprise change in polls showing the IN vote with a significant lead lowering Brexit scares.  The Leave campaign has narrowly edged ahead of its Remain rivals, according to the latest European Union referendum poll.

The survey, carried out by YouGov for The Times on Monday and Tuesday, puts Out on 51 per cent and In on 49 per cent, when non-voters and unsure voters are removed.

Meanwhile, the proportion of “don’t knows” dropped three points to 13 per cent since a similar survey two weeks ago, while four per cent said they would not be voting, a drop of one point. With those figures included, Out was on 42 per cent and In was on 41 per cent.

YouGov’s Anthony Wells says he is “dubious about whether this is an Obama effect”, but says it does “put to bed the idea that the series of polls last week showing a movement towards Remain was the start of some sort of breakthrough”.

Just one in five voters believe the UK will vote to leave the European Union in June, according to the latest referendum poll. The survey, carried out by ORB for the Daily Telegraph, found that 57 per cent of voters expect the Remain camp to win, 21 per cent believe the Leave camp will triumph and 22 per cent are unsure.

“Expectations stay overwhelmingly in favor of an In vote come June,” says political strategist Sir Lynton Crosby, in an analysis for the paper.

However, he warns that this “vast gap” means the Remain campaign is at risk of voter complacency.

“Many of their supporters will expect to win the referendum and thus fail to recognize the significance of their own vote,” he says. Meanwhile, bookmakers have “drastically” shortened the betting odds for a Remain vote.

William Hill and Ladbrokes put the move down to US President Barack Obama’s intervention last week, when he warned the US would prioritize the EU over the UK if it came to negotiating trade deals after Brexit. (The Week)

FxEmpire provides in-depth analysis for each currency and commodity we review. Fundamental analysis is provided in three components. We provide a detailed monthly analysis and forecast at the beginning of each month. Then we provide more recent analysis and information in our weekly reports and we provide daily updates and outlooks.

Upcoming Economic Events that you should be monitoring: