UK pound continues to show signs of building volatility - Investec

Research Team at Investec, suggests that the UK pound continues to show signs of building volatility as the UK's EU referendum vote draws closer.

Key Quotes

“Sterling volatility continues its rally, reaching new seven year highs yesterday, as expectations for price swings and large moves grow. Overnight volatility for the 23 June is now calculated at over 100 vol, compared to usual levels of 10 times less. Also worth noting that a Brexit vote, with the uncertainty it brings, could cause large moves in other currencies as well with Sterling crosses likely to impact currencies right across the board.

For the US Dollar, some of Wednesday's losses were recovered yesterday, particularly against emerging market currencies. Investors continue to adjust positions ahead of next Wednesday's FOMC monetary policy meeting, where very little chance of a second Fed interest rate rise has been priced in. Whatever the outcome, the press conference from Fed Chair Janet Yellen that follows will be widely watched. Will the risk of a Brexit, and the wider ramifications of such an event, keep the Fed in 'wait and see' mode next week?”