From where we sit today, the outcome of the UK referendum set for June 23 on whether or not to remain a member of the EU is anyone’s guess. Members of Prime Minister David Cameron’s ruling Conservative party are free to choose which side to back, although the Government’s official position – including Mr. Cameron’s – is to remain in the union (see video below).
Unless one side takes a commanding lead in Brexit referendum polls (which are sure to become a part of daily discussions in the UK through to the vote date), and even if one side does take a lead, it looks like the GBP is in for a bumpy ride over the next four months.
This weekend’s activity is a very good microcosm of what is likely to happen. The GBPUSD strengthened by more than 1% late Friday, after Mr. Cameron indicated that he had secured a deal on membership terms with EU leaders, giving the UK “special status”. However early Monday trading in the Far East saw the Pound reverse down by more than 1%, after popular London Mayor (and Conservative MP) Boris Johnson said over the weekend that he’d back the ‘exit’ vote.
Up 1%, down 1%…. expect a lot more volatility in GBP cross rates over the coming months.
What this means for UK financial spreadbetting and FX brokers, of course, is a lot more business. More general interest in FX rates, more trading volumes – and more revenues and profits for leading UK online brokers such as IG Group Holdings plc (LON:IGG), Plus500 Ltd (LON:PLUS), ETX Capital, London Capital Group Holdings plc (LON:LCG), Hantec Markets, PhillipCapital UK, and the newly-public CMC Markets Plc (LON:CMCX)