Sterling strengthened to a ten-week high against the dollar on Tuesday, building on Monday’s gains as investors bet more heavily that Britons would vote to stay in the European Union at a referendum in June, following an intervention from US President Barack Obama on the side of the “In” campaign.

“We’ve seen equity funds positioning more for a ‘Remain’ vote, and the (currency) bounce that will cause,” said the head of hedge fund sales with a big bank in London.

Against the euro, too, the dollar edged down, leaving it 0.3 per cent lower on the day against a basket of major currencies. As well as the weaker dollar, oil prices also benefited from hopes of an easing of the global oil glut. Brent crude futures traded up half a percent at $44.75 per barrel, while US crude futures were up 27 cents, at $42.91 a barrel. Both remained off five-month highs hit last week.

An unexpected bond sale from the euro zone rescue fund kept German Bund yields near five-week highs on Tuesday, as worries grew that a recent rise in yields resembled the prologue to a brutal sell-off that occurred in 2015.

Reuters