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Brexit: Mixed messages from UK EU referendum polls – Lloyds Bank

Discussion in 'Fundamental Analysis' started by FXStreet_Team, Feb 23, 2016.

  1. FXStreet_Team

    FXStreet_Team Well-Known Member Trader

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    Research Team at Lloyds Bank, suggests that with the starting gun fired and the date set, the coming months will no doubt be dominated by the EU referendum debate.

    Key Quotes

    Recent polls highlight the uncertainty of the outcome – which could easily translate into heightened volatility, especially for the pound. Since early December, when the prospect of a June referendum began to take hold, the pound has fallen by more than 10% against the euro.

    So what do the polls say? What is striking is just how different recent poll results have been. This month the net percentage of respondents in favour of remaining in Europe have ranged from -9% (YouGov, 4th February) to +19% (Survation, 20th February). This discrepancy partly reflects how the polls were conducted - on the phone or online. Notably, during February the net percentage in favour of staying in Europe has averaged -4% online, compared with +12% in phone surveys.

    Why the difference? This is not easy to explain – especially as it is generally believed that online surveys tend to appeal to a younger demographic that are typically more pro-European. Online surveys have been increasingly favoured by polling companies as they are cheaper to conduct and the number of people with phone landlines has fallen. But it may also be that online polls attract the strong opinions of those against the status quo, as they require more effort to respond to. Research after the general election concluded that phone polls were the more accurate and this may prove the case for the referendum.

    That said, the percentage of undecided voters or non-voters ranges from +10% to +30%, which could well determine the outcome. Of course, we could be excused for ignoring the polls altogether given their poor record at the general election. For what it’s worth, the latest bookmakers’ odds put the probability the UK will stay in around 70%, little changed from last week.”
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