Markets are preparing for the British referendum

Toward the close of the week global markets come to life after a hectic week, and especially after Friday's "rally". The focus is the upcoming British referendum overshadowed the meeting of several central banks, economic releases and sentiment in the oil market. On Friday risky assets reduced force, the European government bond yields rose from record lows, the dollar has traded under pressure.

It turned out that the tragic events of Friday were the indirect cause of the abrupt change of sentiment in the global markets. The murder of a British MP Joe Cox stopped the campaign before the referendum and strengthen the hopes of saving Britain in the EU. Survey results still do not reveal a clear advantage for supporters or opponents of Brexit, which increased the degree of tension to the limit.

I still tend to favor, that Britain's membership in the Union will be saved. However, because of the uncertainty it makes sense to assess the potential extent of movement of cable in both directions. In case the status quo remains, the currency will show growth, however, the reaction will not be such a large-scale and long-term, such as in "exit" scenario. The victory of the opponents of "Brexit" will not cause significant changes. Markets will "rejoice" and soon will forget about this vote. And since the country's exit from the European Union will have a large-scale and long-term consequences, the downward pressure on the pound will be more pronounced and protracted. In this case, the euro also will fall as UK backdown would mark a violation of the integrity of the European region and may result a domino effect.

The fateful vote will take place on Thursday, June 23, and the results should be available on Friday morning. So the markets will have a tense week, the results of which will determine the mood of risky assets in the medium term.