Gold Prices Fall Amid Rate Jitters; Copper Steady as China Stimulus Eyed 
Like we said, as 2016 approached, Brexit came into focus of investors. We even included Britain's European Union referendum as one of the top macro-themes. David Cameron has promised voters, when coming to power, he will hold referendum by end 2017. However, we feel this year the vote could finally take place, due to election in Germany and France in 2017.
This referendum is the most significant risk surround UK's economy and monetary policy. We have long been arguing with interest rates at 0.5% and inflation near zero, it won't be easy for Bank of England to hike rates in 2016.
As referendum risks take center stage, appetite for holding pound in portfolio, without hedge is falling. Though many analysts expect Pound is approaching attractive level for buying, referendum risks really keeping them at bay.
Moreover, New year started with a downside bang from China as the country's stocks and currency plummeting again. Turmoil in China, is particularly bearish for Pound.
Key themes working bearish for pounds are -
- Turmoil in China, means cautious Bank of England (BOE) and lower rates in UK
- UK's economic engine is losing steam, data points to continued weakness in 2015 final quarter
- Brexit fear
- Continued decline in oil prices and continued deflationary pressure in UK.
Pound has fallen to five year low in today's trading, at 1.4561, price action suggests further drop.
