GBP/USD inter-markets: all about ‘Brexit’

The sterling met increasing selling pressure late on Tuesday and during today’s session so far, soon after GBP/USD clinched highs above the 1.4700 handle.

The main driver behind the sharp more-than-2 cents drop seems to be the latest poll results on the EU-UK Referendum on June 23, where the ‘Leave’ vote has (unexpectedly?) narrowed its gap with the ‘Stay’ option.

Reinforcing the ‘Brexit’ catalyst, spot keeps ignoring today’s downbeat sentiment around Fed Funds rate contract and the consequent decline in 5yo Treasuries and the greenback, which navigates session lows in the 95.50 area when tracked by the US Dollar Index.

Adding to the downside, yields in UK Gilts are posting moderate pullbacks, mainly in the lower end of the curve (1-5yo).

Additionally, UK’s benchmark index FTSE100 is retreating nearly 1% to the 6,180 pts area, although we can assume as well that the down move remains framed within the broader negative performance of European equities.