Pound’s rally fizzles out a day before EU referendum

After rising to a five-month high against the US dollar on Tuesday, sterling’s rally ran out of steam today and traded sideways during the Asian session.

GBPUSD traded around $1.4681 in Asia just a day out from the UK’s referendum on European Union membership. Yesterday, the pound hit a high of $1.4782 before sliding. The pound will continue to be volatile and react to Brexit polls.

EURUSD was up 0.1 per cent today at $1.1254, but like most global currencies, had fallen on Tuesday as the US dollar strengthened.

The dollar index, a measure of the US currency against a basket of peers, was up 0.1 per cent in Asian trade at 94.071. The greenback’s advance came in the lead up to Fed Chair Janet Yellen reiterating her cautious stance on the outlook for US monetary policy, but still keeping the door open to raising rates later this year. Ms Yellen was testifying in front of the US Congress yesterday.

Gold, which is typically sensitive to US interest rate expectations, fell 1.7 per cent on Tuesday, and was trading flat at $1,268.15 an ounce in Asia today.

The yen was the best-performing Asian currency in Asia today, strengthening one-third of one per cent against the dollar and pushing USDJPY to 104.41 yen.

Oil prices were slightly firmer today, with Brent crude, the international benchmark, up 0.1 per cent to $50.68 a barrel, and West Texas Intermediate, the US marker, up 0.2 per cent at $49.95.

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