The poll sent the United Kingdom pound spinning to multi-month lows, while sterling volatility – a measure of investors’ concerns over large moves ahead in the currency – moved further into to multi-year high territory.
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Finance minister George Osborne says such an agreement would leave Britain’s economy 6.2 percent smaller by 2030 than it would be if it stayed in the EU.
Bookmakers still believe that the referendum is likely to result in a vote to remain in the European Union, although the probability of an “In” vote has dropped 10 percentage points from last week.
Gold in sterling has risen from £892.50/oz to £908/o today and is up 10% in the first 9 trading days of June, from £827 to £908/oz, as investors diversify into safe haven gold due to concerns Britain will vote to leave the European Union.
A key market measure of the euro zone’s long-term inflation prospects – the five-year, five-year forward – hit a record low around 1.36 percent EUIL5YF5Y=R.
Britain’s hefty current account deficit – 7% of output in the last quarter of 2015 – makes the economy, and the currency, particularly vulnerable to any pull-back in investment flows. Shares of Microsoft fell $1.41, or 3 percent, to $50.06 after the deal was announced.
Before then, the U.S. Federal Reserve, Bank of England, Swiss National Bank and the Bank of Japan are all expected to hold monetary policy steady against a backdrop of caution heightened by the Brexit issue.
While last month there was a large group of investors betting that the Fed would raise interest rates, the last two monthly jobs reports in the US have put a damper on expectations.
The index of major European bank shares fell 2 percent.
Polls, which show Britons are evenly divided ahead of a June 23 referendum on European Union membership, also indicate the elderly are among the most likely to turn out on polling day and are also among the most eurosceptic voters. The pound last traded down 0.7 percent at 151.79 yen.
BLUE CHIPS: Security software company Symantec jumped $1.14, or 7 percent, to $18.43 after the company said it would purchase another security company, Blue Coat, for $4.6 billion.
Concerns over its long term affordability have been raised a number of times over the last few years. The Fed meeting will conclude on Wednesday afternoon with a statement and fresh forecasts followed by a press conference helmed by Fed Chair Janet Yellen.
ENERGY: U.S. crude fell 56 cents to $48.51. Britain’s FTSE 100 fell 1 per cent, Germany’s DAX 0.9 per cent, and France’s CAC 40 by 0.8 per cent.
The supply-demand dynamic remains imbalanced even as recent supply disruptions in Canada and Nigeria and a downward trend in US production supported crude prices.
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Benchmark 10-year notes were last up 2/32 in price to yield 1.63 percent, after earlier hitting 1.61 percent, the lowest since February 11.
