Afternoon analysis 07.06.2016

A new opinion poll for the UK slightly reduces a risk of Brexit. Oil is above the 50 dollar/barrel. The zloty is stronger regarding solid global sentiment and lower odds for interest rate hike in the US.

The pound is depended on opinion polls

Fears concerning Brexit almost completely dominated the pound trading. The British currency has been moving in line with the incoming opinion polls. Yesterday, the EUR/GBP reached the highest level since almost a month. Today, however, the pound is already stronger by more than one percent against the European currency.

It is mainly the result of a telephone survey conducted by the ORB, which showed that 52% of respondents would vote to remain in the EU while only 40% would leave. The difference is 12 percentage points, significantly above the recent average.

It is also worth noting that the ORB study was conducted by telephone, and in comparison to the same survey run on May 29th it showed an increase for the remain camp by one percentage point. Theoretically, the change is small, but taking into account a series of surveys in the past few days, especially the ICM telephone survey, which pointed a lead of those who support Brexit, the ORB results may be an indication of returning to the earlier trend.

Surveys from previous months carried by traditional method, showed a roughly 10 point lead by the EU supporters. Online research suggested a more or less tied result. Because one or two out of six surveys are usually conducted with traditional methods, the EU supporters feel quite comfortable, despite that the result was a draw.

Hence, if the ORB survey will be confirmed by subsequent telephone research, then the fear associated with Brexit may decrease slightly, and only return just before the referendum. We may also see some rebound on the pound, which lost around 3-4% to most currencies.

Stronger Oil. Stable zloty

A barrel of oil is reaching levels unseen for almost a year. Both the Brent and the WTI rose around 80% since the lows reached at the beginning of 2016. Traders also feel more comfortable with transactions above the 50 dollar mark.

Higher levels on energy commodities are also helping the mining industry in the US and are positive for the financial sector in the States, which provided credit to the sector. This also translates to higher levels on US indicies. Yesterday, the S&P 500 reached its highest levels this year and it is only 1% short of historical records.

US stocks are also partially on the rise due to the quite dovish Federal Reserve view. The weaker employment is a negative signal, but, if it is only a statistical disruption and the economy is in good shape, a more benign monetary policy is positive for companies. It would reduce the financing costs and improve indicators.

Finally, positive global sentiment and dovish Fed is helpful for the zloty. The EUR/PLN is testing 4.35 level and USD/PLN is getting closer to 3.80. However, it is worth noting that the move is fully initiated on a global scale. The zloty is not able to regain earlier losses to the forint - which are around 3-4% since the beginning of the year and is a result of the internal weakness of the national currency.