Sterling supported on abating Brexit fears - BBH

Analysts at Brown Brothers Harriman noted that Sterling was aided last week by some polls indicating a shift toward the Remain camp.

Key Quotes:

"The referendum will be held a month from Monday. Also, April retail sales rose twice the median forecast, pointing to a good start to Q2 for consumption. Sterling's advance retraced more than 61.8% of the losses since May 3.

We are skeptical of referendum-inspired gains.

It is not like the referendum had blocked sterling. It appreciated 6.8% from late-February through early-May.

It is in the options market that the referendum risk can be managed more effectively than in the spot market.

The overall dollar direction is important for sterling, and the challenges for the UK transcend EU-relations.

The market sold into the upticks, and sterling dropped 0.75% before the weekend and closed a little above $1.45.

Initial support is seen near $1.4460, and then $1.4400, with the month's low around $1.4335, which coincides with the lower Bollinger Band."