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EMPICS Entertainment

Brexit speculation is sending the pound's value up and down

The exchange rate is all over the place.

WHILE THE UK goes to the polls this week on leaving the EU, uncertainty over a Brexit has sent the strength of the pound up and down.

A surge in support for Brexit had sent investors racing for financial shelter in the days ahead of a referendum that could redraw the political map of Europe.

It also sent the pound down to two month lows against the Euro as markets become increasingly uncertain, but the currency has rallied this week.

Part of that uncertainty is that nobody knows exactly what kind of Europe would be left behind should Britain leave.

Bookmakers put the chances of Britain leaving the EU at about 42%, a sharp rise from just a few weeks ago.

Last Monday, the pound dropped to a two-month low against the euro and dollar. However, it surged again yesterday as the race becomes tighter and tighter.

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The pound has been on a see-saw as the referendum approaches, with critics of a so-called Brexit warning that leaving could spell disaster for Britain’s prospects.

“It is difficult to take long positions now ahead of the vote,” said Minori Uchida, head of Tokyo global markets research at Bank of Tokyo-Mitsubishi UFJ.

On the flipside, the euro has suffered in the last two days, with one of the single currency now buying just over 77 cent. That had hit 79 cent last week.

Kay Daniel Neufeld, an economist with the Centre for Economics and Business Research in London says that a Brexit would mean a depreciation in the pound which would mean better exchange rates for Irish people, but bad news for businesses.

Given the markets’ nervous reactions to polls showing Brexit in front, a vote to leave would almost surely lead to a shock in investor confidence and a flight out of sterling. Given the UK’s massive current account deficit this would lead to a sizeable depreciation of the pound making imports more expensive and thus adding upwards pressure on inflation.

Polls ahead of the British referendum have now become masters of market sentiment, said Greg Jones, managing director at Henderson Global Investors.

“As we come closer to the referendum vote, market reaction really depends on where the polls go with volatility likely rising on any prospect of a leave outcome,” he said.

With AFP reporting

Read: Bob Geldof and his ‘we’re going to need a bigger boat’ battle with Brexit

Read: Enda’s off to Britain to ask them to stay in the EU

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    Mute Stephen Duffy
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    Jun 21st 2016, 7:04 AM

    Goes to the polls “next week”. And there was me making plans to vote on Thursday. Getting such a basic fact wrong in the first sentence hardly encourages one to read the entire article.

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    Mute Kathleen Kavanagh
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    Jun 21st 2016, 7:07 AM

    Think it’s a “Test” :-/

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    Mute Larry Fitzwell
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    Jun 21st 2016, 7:31 AM

    “The pound has swooned” and “the single currency now buys 77cent”.

    Could you just take down this article as it does more damage than good.

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    Mute Andy Cahalan
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    Jun 21st 2016, 6:55 AM

    That’s some disingenuous charting. The pound was at a 12 month high on that peak, still strong this morning. All my forex are up for GBP this morning, I made money on it.

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    Mute Prince of Burren
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    Jun 21st 2016, 7:05 AM

    Agree Andy, the pound has gotten very strong in the last 48 hours

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    Mute Alien8
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    Jun 21st 2016, 7:18 AM

    the chart clearly shows that the euro/pound is exactly the same as when the campaign started on April 13th. And there is some scaremongering out there, but we are unsure who they are supposed to be scaring.

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    Mute Larry Fitzwell
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    Jun 21st 2016, 7:28 AM

    Thank God for those comments, I was beginning to doubt everything I ever learned. I’m expecting a euro to buy 80pence by Thursday evening…

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    Mute Fred Johnson
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    Jun 21st 2016, 10:29 AM

    Andy the movements of sterling after Brexit are a little more relevant. Are you pricing in a 20% decline in sterling on Friday morning?

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    Mute Vladimir Vasyectomy
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    Jun 21st 2016, 7:57 AM

    Fear, Fear, Fear, – it’s easy to see who controls the media.
    When I look at the list of people who want Britain to stay, – Merkel, Cameron, Soros, Juncker, $utherland, – even pipsqueak Kenny, – I know that a ‘Brexit’ is the best deal for the ordinary citizens, in the long run.
    Ireland next, please. (as it would be nice to be able to pick your own government, rather than voting for Euro lap-dogs.)

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    Mute Valthebear
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    Jun 21st 2016, 8:21 AM

    Like the supposed ‘massive’ spike in Brits trying to obtain Irish passports? I think if and when UK leaves EU, actually very little will change in short term. Question is, does any country want to be a member of this ever expanding non democratic elitist organisation in ten years time…God only knows what powers the EU will have stripped off sovereign nation states by then…

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    Mute JibberIrish
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    Jun 21st 2016, 7:37 AM

    This is game of thrones stuff. It’s the seven kingdoms that may very well collapse without the only stable currency in it, but Britain will be still standing.

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    Mute Nigel Sinnott
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    Jun 21st 2016, 11:51 AM

    Seems to be very little mentioned above how much the euro will suffer if they leave. A fairly good prediction is that both currencies will be battered but the pound will recover better and faster than the euro.

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    Mute John Mullan
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    Jun 21st 2016, 7:47 AM

    Can this article bring Jo Cox back to life as well please?

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    Mute prop joe
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    Jun 21st 2016, 12:26 PM

    Good news for the Irish consumer. I am sure Tesco and all other British retailers will pass on the the extra money they are making .

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    Mute Jeffre Tomred
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    Jun 26th 2016, 2:37 AM

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