Brexit fears pressure GBP

Sterling has had a choppy start to the week and fell to a two-month low against the dollar on Monday. Brexit fears are pressuring the British currency, as the EU referendum on whether the UK should remain or leave the Union is in about a week’s time.

GBPUSD traded near yesterday’s lows in the Asian session on Tuesday, to around $1.4185.

Recent Brexit polls have shown that the “leave” campaign has been in the lead and this has caused nervousness in the markets.

The risk-off environment has led to investors flocking to the safety of the yen, which is approaching multi-year highs.

USDJPY continued to flirt with the 106 yen level on Tuesday, bringing it closer to the May 3 low of 105.54 yen.

Gold is hovering near a four-week high due to safe haven demand. The precious metal traded at $1287.04 on Monday and consolidated these gains on Tuesday, to trade around $1280.

EURJPY traded at 120 yen, near Monday’s fresh three-year low. EURUSD traded just below the key $1.13 level.

Investors are also playing it cautious ahead of a raft of central bank meetings this week, kicking off with the Federal Reserve’s policy decision on Wednesday, followed by the Bank of Japan and Bank of England on Thursday.

Although the Fed is expected to now remain on hold, the overarching concern, that patches of softness in the US and global economy have resurfaced, is countering the boost that otherwise might be expected to accompany monetary policy staying accommodative for longer.

Oil prices were weaker today, with Brent crude, the international benchmark, down 0.9 per cent at $49.90 a barrel and West Texas Intermediate, the US marker, down 1 per cent at $48.39.

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