Sterling falls to two-month low over Brexit opinion poll

Sterling skidded over 1 per cent against the dollar today to hit its lowest level in two months, after another opinion poll put the Leave campaign clearly ahead just nine days before a referendum on whether Britain should stay in the European Union.

The latest survey, from market research company TNS, gave British support for leaving the EU a seven-point lead, adding to a string of polls that put the Brexit campaign ahead.

Betting markets, in response, raised the chances of the country voting to leave the EU, causing anxiety among investors. The implied probability of a vote to remain inside the bloc fell to around 60 per cent today, down almost 20 percentage points from last week, according to Betfair.

Many analysts believe a Brexit vote on June 23rd would hurt the economy and send sterling tumbling, while a vote to stay would be likely to drive the currency sharply higher.

Sterling fell to as low as $1.4097, after the TNS poll, down 1.1 per cent on the day and its weakest since mid-April. Against the euro, though, which was weaker against most other currencies, the pound inched down only 0.2 per cent to 79.43 pence.

“It [Brexit risk] is becoming a much broader issue than just sterling weakness,” said RBC Capital Markets strategist Adam Cole. “What we’re seeing is the still-rising UK exit risk playing out more in a global risk-off move.”

Against the safe-haven yen, sterling fell as much as 1.5 per cent, to 149.24 yen, its lowest level in nearly three years.

Brexit worries overshadowed inflation data. Consumer prices rose 0.3 per cent in May compared with a year ago.

The Bank of England meets this week and while there are no expectations of a move, there is focus on what policymakers think.

Brexit has dominated the market since late last year, driving a trade-weighted decline of more than 10 percent in sterling since late November.