Just four hours ago, when the first Asian bourses opened for FX trading, we reported that sterling had soared by 75 pips in early trading, rising to its highest level in 10 days.
Fast forward to the moment Japan opened for trading, when the momentum algos finally kicked in, and in an attempt to cover up another month of disastrous economic news for Japan (which reported a 11.3% collapse in exports, together with a 13.8% plunge in imports), cable exploded suddenly and violently higher on high volume as a major stop level was triggered at 1.454, which in turn launched FX momentum algos, and promptly took GBPUSD above 1.46 nearly 600 pips higher than the Thursday lows, and less than 200 pips away from Citigroup’s “extreme” print forecast of 1.4799 in the event of a Remain vote.
Of course, Remain hasn’t even voted yet, and instead the entire euphoria is based on one poll supposedly taken in the aftermath of Jo Cox’ murder, which has given Remain a fractional lead.
What is perhaps just as curious is that using Citi’s GBPUSD “extreme print” range for Exit and Remain outcomes of 1.2777 and 1.4799, respectively, with Cable trading at 1.45570, this means that as of this moment, the FX market is pricing in an 88% probability of a Remain victory.
Finally, the reason for the massive buying spree and the surge in speculation that the UK will remain in the EU, it is highlighted appropriately in red in the chart below.
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