Hello, forex friends! The pound was on a bullish offensive last week and yesterday’s (Tuesday, May 24, 2016) performance indicates that the pound is staging yet another bullish offensive this week.
But why did the pound soar yesterday? Well, the title already says it all, so let’s dig right in.
Oh, as a bonus, I’m also giving you some resources to help you out with regard to looking for up-to-date information on Brexit-related polls. And for the newbies out there who are puzzled as to what this Brexit thing is about, you can check out my Primer on the Brexit Saga, as well my Brexit Update on the Referendum Date.
Okay, let’s get on with the show.
What happened yesterday?
Yesterday was a day of infamy for pound bears everywhere, but for pound bulls (like me), that was a wicked brilliant day. But what drove the pound higher across the board?
Pip Diddy even mentioned in his morning London session recap that pound pairs just chewed through sell orders like nobody’s business despite some downbeat (and a few hilarious) remarks from BOE Governor Mark Carney.
Well, practically every financial news outlet from Bloomberg to Reuters, to The Financial Times is saying that yesterday’s rise was due to The Telegraph’s latest ORB survey, which showed that the majority of Conservative party supporters, voters aged 65+, and men who will definitely vote during the June referendum have now moved to the “remain” camp, with the anti-Brexit or “remain” camp leading the pro-Brexit or “leave” camp by 13 percentage points (55% remain vs. 42% leave).
For the entire voting population, this translates to the “remain” camp having a very substantial 20-point lead over the remain camp (58% remain vs. 38% leave).
I think Pip Diddy missed this particular item because it was released before the London session opened and the market’s initial reaction to it was subdued at best. It wasn’t until almost an hour later that the pound’s price action began to pick up, probably because it took a while for market players to finally digest the significance of the change in voting sentiment.
Men, older voters, Tory supporters? Huh?
Those demographic groups are the main targets of The Telegraph’s ORB survey and yesterday’s shift is very significant because those three demographic groups are (or were, to be more precise) the pillars of the “leave” camp.
Supporters of the Tory or Conservative Party, for example, were overwhelmingly pro-Brexit back in March, with 60% of Tory supporters clamoring to leave the EU. But yesterday’s poll shows that 57% of Tory supporters now want to stay with the EU.
Meanwhile, 55% of male voters have switched to the “remain” camp, which is a mirror image of March’s poll numbers wherein 55% of male voters wanted to get out of the EU. As for voters aged 65+ (i.e. pensioners), 62% of them wanted to part ways with the EU back in March, but yesterday’s poll shows that 52% of them now want to remain with the EU. Again, a very significant switch in voter sentiment.
Great, but what do other polls say?
According to a compilation of Brexit-related polls courtesy of whatukthinks.org, otherwise known as the “poll of polls,” voting intention on the Brexit issue is now heavily skewed towards the “remain” camp, with 54% of likely voters now sitting on the “remain” camp versus 46% for the “leave” camp.
And below is a table that shows how the most recent polls have fared. Note that red means the losing team. And as you can see, the “leave” camp has been losing consistently in recent polls.
Uh, any resources we can use?
Trading the pound is gonna be tricky if Brexit-related polls will continue to drive the pound’s forex price action since poll results can come at you from any direction.
Fortunately, there are things you can do to see if the pound’s price action is being driven by poll results. And if the poll results are good enough, you may even wanna ride out the momentum if you can acquire the information early enough.
Most of the other major polls publish their results with a delay (sometimes up to a day), however, and require you to pony up some cash if you really want up-to-date information. That’s okay, though, because financial media outlets like Reuters usually have the up-to-date information that we need and it’s all free.