Initial Guidance | 21 June 2016

Recent Brexit polls in Britain show rising support for keeping the UK in the European Union in Thursday’s referendum. But analysts say that the vote will probably be close. A new poll by ORB for Tuesday’s The Daily Telegraph newspaper, Reuters reports, reflects 53% support for the Remain campaign—five percentage points higher than the previous poll. “All the signs of ORB’s latest and final poll point to a referendum that will truly come down to the wire,” says Lynton Crosby, a political strategist. But the recent improvement in support for the Remain forces suggests that the opposing Leave camp has “failed to quash the almost ubiquitous perception that it is the riskier of the two options,” he notes.

Nigel Farage, head of the UK Independence Party and a leading advocate for Brexit, admits that support for leaving the EU is waning. “We did have momentum until this terrible tragedy [he killing of Labour Party lawmaker Jo Cox],” Farage told British television over the weekend via USA Today. “When you are taking on the establishment, you need to have momentum. I don’t know what’s going to happen over the course of the next three to four days.”

Brexit will likely be a topic today when Fed Chair Janet Yellen delivers testimony in Congress today. “Brexit is going to dominate the market if it looks as if they are going to leave,” advises Quincy Krosby, market strategist at Prudential Financial. “If it looks like they’re going to stay, Yellen will dominate the market.” Otherwise, “Yellen will probably face a grilling about the shortcomings of monetary policy,” a Bloomberg article notes. “In many cases, the Fed chair has data to speak in her defense.”