With referendum day now less than two weeks away, it is no longer possible to register as a voter (the deadline was extended to midnight on Thursday as the website broke down on Tuesday) and both camps have intensified their campaigns. Recently, TV channels have aired several EU programmes including debates among leading politicians, which could potentially affect the referendum outcome as recent opinion polls have shown there are still many undecided voters.
We plan to monitor the coming opinion polls closely for any new trends. Until last week, most opinion polls had 'remain' ahead (although not by much or necessarily statistical significantly) but as we wrote in Brexit Monitor No. 6: It is not over until the fat lady sings , 3 June, it is not over yet. At this stage, we cannot say what the outcome will be. Betfair's implied probability of a Brexit is currently 27.4%.
GBP risk premiums in the FX option market increased further this week while EUR/GBP was little changed following the past week's repricing of Brexit risks. As such, opinion polls are likely to continue to be pivotal for pricing of GBP assets in coming weeks. We expect volatility to remain high and see risks skewed towards a weaker GBP ahead of the referendum as Brexit uncertainties are likely to remain intact.
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