Sterling rallies as polls favour Britain remaining in EU

Sterling rallied on Monday as opinion polls swung in favour of British voters opting to remain in the European Union at this week's referendum, underpinning risk sentiment and sending the perceived safe-haven yen tumbling.

The pound climbed 1.6 per cent to $1.4589, extending a recovery from last Thursday’s more than two-month trough of $1.4013. It jumped more than 2 per cent to 152.65 yen, pulling well away from a three-year trough around 145.34 set on Thursday.

Investors took heart after three of six opinion polls published over the weekend showed a shift towards keeping Britain in the EU, but the June 23rd vote still looked too close to call.

"The poll findings will resonate today, likely seeing further advances for sterling, some renewed weakening in the yen and a firmer Australian dollar," said Ray Attrill, global co-head of FX strategy at National Australia Bank. Even before the latest polls, data from the Commodity Futures Trading Commission released on Friday showed that currency speculators reduced their net short positions against sterling in the latest week, from a three-year high in the previous week. The pound still declined by around 3 per cent against the dollar during the June 7-14 timeframe.

Indicating a general pick-up in risk appetite, US stock futures rose more than 1 per cent, suggesting a positive open on Wall Street later in the day. MSCI’s broadest index of Asia-Pacific shares outside Japan gained 1 per cent, and Japan’s Nikkei stock index soared 2.2 per cent.

Last week’s murder of pro-EU lawmaker Jo Cox appears to have tipped some polls toward the “Remain” camp, though earlier polls showed the electorate is narrowly divided. “Jo Cox’s death might have been some kind of a game-changer, but maybe not. I think speculators will continue, selling the pound and buying yen, based on polls,” he said. “This is a just a rebound today, and not based on any fundamentals.”

Reuters