The British pound rose sharply during Asian trade after Brexit opinion poll results showed sentiment shifting towards the ‘Remain’ campaign.
Brexit breakdown surprises market
Speculations that Britain is more likely to stay in the European Union came as a sign of relief to forex traders, who turned bullish on sterling. According to a Betfair, a gaming website, there is a 73% chance Britain remains in the EU, which rose from 60% last week. These results pushed GBP/USD (GBPUSD) higher by 2.10% to 1.4660 while yen snapped gains with USD/JPY (USDJPY) up 0.34% to 104.52. Currency strategist at Commerzbank, Ulrich Leuchtmann, said that Britain’s exit from the EU is no longer the most likely scenario. EUR/USD (EURUSD) paced ahead by 0.62% to 1.1346.
Weak Dollar helping oil
As yen went tumbling, Japanese stocks experienced a steep rebound, leading most Asian indices. The upswing in markets came after most recent opinion polls eased Brexit fears. Nikkei 225 (INDEXNIKKEI:NI225) surged 2.34% to 15,965.30 and Hang Seng (INDEXHANGSENG:HSI) jumped 1.69% to 20,510.20. Like Asian counterparts, European shares added large gains after Brexit momentum broke rapidly. DAX (INDEXDB:DAX) rose 3.17% to 9,936.43, followed by CAC 40 (INDEXEURO:PX1) that traded up 2.75% to 4,308.99.
This also translated into gains for oil as well. A weak dollar further lent support to commodity prices. During Asian hours, Brent Crude swung to above $50 per barrel mark, adding 1.91% while West Texas Intermediate Crude oil advanced 1.71% to $48.80. Michael McCarthy, chief market strategist at CMC Markets, said that oil gains will be capped if shale drillers continue to ramp up oil rigs leading to higher production. Baker Hughes’ oil report showed that at least nine rigs were added during the previous week. Shrugging off these concerns, oil continued to move towards recovery.