UK Pound Moves Up Despite ‘Brexit’ Fears

The UK pound has continued its strong performance against major currencies, despite growing fears of the UK leaving the European Union (EU), with the referendum scheduled for June 23.

So far today GMT, the pound has fallen to buying $1.442 from $1.446, but is still trading strongly against the greenback, and sterling is the highest it has been against the dollar since the middle of February.

Fears over the value of the pound, due to the uncertainty over the outcome of the referendum, has been allayed for now.

This is attributed to the dovish announcements for the Federal Reserve to hold interest rates between 0.25% and 0.5%.

And the forecast at the end of last year to increase rates four times throughout 2016, has been cut to a possible two hikes in interest rates.

Against the euro, the pound has also began the day by falling to buying EUR 1.28, although this is only a slight depreciation from purchasing at EUR 1.282.

Since the end of last week, the pound has appreciated on the euro, jumping up from buying just over EUR 1.27.

CBI Report Highlights EU Exit Dangers

A report commissioned by the influential Confederation of British Industry (CBI), has concluded that an exit from the EU would cause a ‘serious economic shock’, for the UK.

The lobby group said that there would be “negative echoes”, which would be prolonged for many years.

The cost to the British economy could reach up to 5% of the total of GDP, resulting in 950,000 jobs being lost by 2020.

Pricewaterhouse Coopers, who carried out the report for the CBI, also said negotiations for trade deals would prove difficult and time consuming, in the event of a ‘Brexit’.

The accounting firm also concluded that if Britain voted to stay in the EU, the average annual GDP growth between 2016 and 2020 would be 2.3%.

Comparatively, this is more prosperous, than the 1.5% of economic expansion under a free trade agreement with the EU, and 0.9% growth  if the UK agreed a deal as a World Trade Organisation member.

EU28 Current Account Surplus €14.3 billion for January

All of the EU member states have an aggregate current account surplus of EUR 14.3 billion in January, according to a first estimate from Eurostat.

The figure was down from the surpluses of EUR 17 billion in December 2015,  and the latest data revealed a smaller year on year EUR 21.4 billion in January 2015.

The surplus of the goods account grew in January compared to December, with an increase EUR 13 billion  compared with 12.1 billion, Eurostat said.

There was a decrease in the services account surplus, which dropped to EUR 11.9 billion, in January, from EUR 13.1 billion.

And the deficit of the primary income account increased to minus EUR 3.7 billion, compared with a minus EUR 0.9 billion in December.

Over a 12 month period up to the end of January this year, the cumulated current account, climbed to an excess  of EUR 181.2 billion.

A favourable figure when compared with EUR 138.2 billion for the 12 months leading up to January 2015.