Daily analysis 13.06.2016

A survey that indicated a record advantage for the Brexit supporters, caused more anxieties before the British referendum. Surveys among economists regarding behavior of the pound after the referendum. Sensitivity of the zloty to the signals from the global markets remains high.

Most important macro data (CET – Central European Time). Estimations of macro data are based on Bloomberg information, unless marked otherwise.

• No macro data that could have a significant impact on the analyzed currency pairs.

United Kingdom is in the center of attention

On Friday evening, we received a new survey that was conducted by the ORB in co-operation with The Independent. The survey showed that the Brexit supporters have 10% advantage over those, who wish to remain within the European Union. The GBP/USD pair depreciated by more than 150 pbs in twenty minutes. This means that the pound wore-off against the dollar by more than one percent.

Of course, this can be explained by the fact that it was another online survey. Such surveys overestimate slightly the chances of the Brexit supporters. We may also take note that the result is not completely comparable to the previous surveys. This is because that it included a will of participating in the referendum. Votes of respondents who claimed that they will 100% participate were of a higher value, than of those who estimated probability of their participation for 70%, for example.

However, even if we omit the above remarks, the advantage is still on side of the Brexit supporters (53% vs 47%). It is also worth noting that not only the pound lost value after publication of this survey. There was a change in evaluation of the American shares. Moreover, we could observe a decrease in profitability of debt instruments. This goes to show that the British referendum is becoming a more global topic that creates either an increase or decrease in risk aversion worldwide.

Two different online surveys may lead us to slightly more optimistic conclusions. They were revealed during the weekend. The Opium/Observer survey showed a 2% advantage for the EU supporters. On the other hand, the YouGov survey indicated a 1% advantage for the Brexit supporters. These two surveys are near the results that have been present in online surveys for months.

It is possible that the Friday survey has caused such changes in the broad market, due to imminence of the referendum. Especially considering the fact that singular surveys have already shown extreme sentiments. For example, the ORB/Daily Telegraph survey from May 18th -22nd showed a 20% advantage of the EU supporters. The difference was very big, even considering only the votes of those who were certain they will participate in the referendum (13%).

However, it is possible that the situation will calm down. According to whatukthinks.org website, more phone surveys should appear this week. If they indicate approximately 10% advantage for the EU supporters (consistent with the past weeks' median), the fear may fade away. Of course, the alternative scenario is possible as well (however, less likely). A draw in phone surveys would increase fear in the market even more, as well as cause depreciation of the GBP/USD below 1.40. Moreover, it would have a negative effect on the global sentiment as well.

Pound after the referendum

This morning, the Bloomberg agency published a survey that was conducted among thirty-two economists. It concerned a hypothetical behavior of the pound shortly after the referendum. If the Brexit occurs, the GBP/USD would go below 1.30 one day after the voting. This is the opinion of 44% of respondents. On the other hand, five respondents out of thirty-two claim that the GBP/USD would be at the level of 1.2 (15% below its current level).

However, 74% of respondents claims that the GBP/USD will be above the level of 1.45, if the United Kingdom remains within the EU. Also, 29% of respondents thinks that the pound will cost more than 1.50, which is approximately 6% more than now.

These results are consistent with what intuition tells. Despite that the public opinion surveys indicate a result that is near a draw, the market estimates the situation slightly different. Investors would be more surprised with Brexit, rather than the victory of the EU supporters. Thus, the expected reaction will definitely be more intense in case of Brexit.

It would probably be more difficult to answer on how will the pound behave after a few months. It is also possible that fear of economists is slightly overestimated. Especially when it comes to those who expect a clear decrease below the level of 1.30. Brexit will be a process that is divided onto many quarters, or even years. This should limit the panic.

Zloty is very sensitive

Last Friday we took note that behavior of the zloty is quite disturbing. The currency became very sensitive on the global sentiment (definitely more than the forint), and moves on the PLN are becoming similar to the ones on the Russian rouble, as well as on the rand. The Polish currency lost approximately one percent against the forint by Friday morning.

There is basically no sign of the EUR/PLN depreciation caused by weaker data from the USA, as well as decreased expectations regarding the hikes. The euro is yet again at the level of 4.40. It is also expected that the Brexit will not be favorable for the Polish economy. On one hand, this would limit the capital flow from the EU. On the other hand, it is possible that access to the British market would be more difficult for the Polish entrepreneurs.

As a result, Brexit remains the main catalyst of changes, just as it is in the global market. If the new surveys do not limit it, the new base case scenario will be the EUR/PLN at the level of 4.40, as well as the USD/PLN at the level of 3.90.