British Pound Races Up, Oil Falls As Market Turns Focus On Supplies

The British pound hit seven-week high against the U.S. Dollar (CURRENCY:USD) today after at least two opinion polls firmed up expectations of Britain’s remaining in the European Union. In light of these developments, Investors’ appetite for safe-haven assets diminished, leading to a fall in yen and gold.

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Bremain gaining ground

Manuel Oliveri, currency strategist at Credit Agricole, said that recent events have turned sentiment in favor of Britain’s stay in the EU, though it is still a close call. According to Oliveri, Sterling can rise to $1.55 if the U.K. decides against Brexit. During European hours, GBP/USD (GBPUSD) rose 0.45% to 1.47. EUR/USD (EURUSD) too gained 0.23% to 1.1341 while the greenback maintained a lead over yen with USD/JPY (USDJPY) up 0.51% to 104.47.

Equities up but oil falls

Asian equities extended their previous day’s gains today ahead of Federal Reserve Chair Janet Yellen’s comments and Britain’s referendum this week. Two polls suggest that Bremain is gaining traction ahead of final referendum, which uplifted sentiment towards risk assets. Nikkei 225 (INDEXNIKKEI:NI225) moved up by 1.28% to 16,169.11, gaining the most on account of the yen’s fall. The Hang Seng (INDEXHANGSENG:HSI) also recorded gains as it advanced 0.77% to 20,668.44.

Meanwhile, European shares added gains, however, traders appeared nervous due to uncertainty around Britain. Economist Nouriel Roubini, nicknamed Dr. Doom, urged the UK not to leave the EU, which in his opinion could push Britain into recession. Among major indices, DAX (INDEXDB:DAX) gained the most, up by 0.23% to 9,984.50.

In commodities, iPath S&P GSCI Crude Oil Total Return (NYSEARCA:OIL) recorded losses for the first time in three days as traders turned their attention back to supply issues. Brent Crude slipped nearly 1% to $50.15 and West Texas Intermediate Crude oil fell 0.91% to $48.92. Commenting on future trajectory of oil, Shintaro Ambe, executive vice president at Mitsui & Co. said that prices near $60 a barrel could prompt U.S. share drillers to scale up operations, which can limit substantial upside in oil.

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