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Flat Day For Pound As EU Vote Looms Large

A much calmer session for the pound and world stock markets, reflecting relative calm despite the referendum on Thursday.

Sterling remains at its highest level since the start of the year despite polls suggesting a boost for the Remain campaign in the EU referendum.

The pound continued to rise to just over $1.47 earlier on Tuesday, building on its biggest one-day surge against the dollar for nearly eight years on Monday, before falling back slightly in late afternoon trading.

Last week, sterling was changing hands closer to $1.41, after polls appeared to indicate the Leave campaign was taking the lead.

But that changed as campaigning was suspended following the killing of Labour MP Jo Cox - with Monday's recovery in the pound's value in the dollar being explained by polls suggesting Remain in front.

"Some of the recent events have been favourable for Britain to remain in the EU, but it’s still too close to call," Manuel Oliveri, currency strategist at Credit Agricole said.

"If Remain wins, we expect sterling to rise to $1.55," he added.

That prediction came after the billionaire currency trader George Soros predicted $1.15 to the pound if Brexit was confirmed.

Stock markets also had a calmer day on Tuesday.

The FTSE 100 index rose 0.4% to 6226 after gaining more than 3% on Monday - adding £47bn of value to the value of the UK’s blue chip share index.

Bookmakers, in addition to polls, are being closely watched by investors.

Ladbrokes had the odds for a remain vote at 74% on Tuesday while the betting odds comparison service, Oddschecker, had a 78% chance of a Remain victory.

Head of trading at ETX Capital, Joe Rundle, warned the accuracy of polls cannot be relied upon - given the result of the 2015 General Election which pollsters had expected to be a hung Parliament - and said there was still "huge uncertainty" for markets.

"Traders betting the farm on a sterling rally happening on Friday should remember just how wrong the polls were at the last general election and just how far the pound could drop if Britain votes out", he said.

The chief strategist at CMC Markets in London, Michael Hewson said: "Financial markets appear to be taking the view that the race may well already be run, which given the twists and turns seen already in this campaign may well be extremely far sighted, or dangerously premature".

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