Good morning.

Remain camp takes largest lead in three months

Sterling surged yesterday, rising resolutely above 1.46 and enjoying its strongest day in weeks as the latest Ipsos MORI poll on the EU Referendum showed the remain camp with 55 per cent of the vote, and the leave camp with just 37. This has given ‘the remainers’ their biggest lead in the past three months and reassured markets that the UK voting to stay in the European Union is the most likely outcome. As Brexit risk apparently fades from sterling, it’s worth remembering that the more sterling rallies ahead of June 23rd, the less sterling will rally afterwards should remain emerge victorious.

The large jump in support for retaining the status quo follows Bank of England governor Mark Carney’s recent entry into the debate, where he outlined the heightened odds of a technical recession in the UK if a Brexit came to pass. It’s worth noting that the BoE governor is due to enter a self-imposed pact of silence on the Referendum in a week’s time, so any further intervention from the BoE will likely come in the next seven days, or not at all.

Chances of Fed rate hike in June double as minutes highlight confidence in recent strong data

April’s Federal Reserve minutes (released yesterday evening) lifted the US dollar, as the Fed focused keenly on June as a ‘live’ opportunity for the board to move rates higher. Most members of the Fed now believe that if current economic data trends continue, a rate rise in June would be ‘appropriate’. Given this week’s most recent inflation figures put the US firmly on track to touch their 2% target in the not-too-distant future, it’s likely that at least a few of these members will be voting for higher rates, despite the near term risk of the UK’s EU Referendum. Nonetheless, futures markets are only putting the chances of a rate hike at 34% in June – a signal that the dollar has further to go if the Fed take action.

UK retail sales take a backseat after yesterday’s surprising EU Referendum polls

Today’s release of UK retail sales is likely to be somewhat inconsequential as yesterday’s poll news lit a fire under sterling. That said, the march of the UK consumer is expected to have returned this month as the effects of an early Easter holiday dissipate and earnings are boosted by the introduction of the National Living Wage in April. The UK figures are due at 09:30 UK time.

ECB minutes likely to be uninspiring

Elsewhere, the ECB minutes are unlikely to stir much inspiration in the euro markets. It’s likely that March’s easing measures will be seen as sufficient to stay the hand of the ECB for the time being and any conversation is likely to revolve around any real evidence that their policy steps are having an effect yet. Given that much of their liquidity provisions outlined a few months ago are yet to take place, this won’t be a lively release. The ECB’s minutes are due at 12:30 UK time.

Have a great day.