STERLING came under significant pressure on the foreign exchanges yesterday, after two opinion polls put the Brexit camp in the lead ahead of this month’s referendum on UK membership of the European Union.
The pound tumbled to a three-week low on its trade-weighted index against a basket of currencies. It also lost ground against the euro and the dollar.
Sterling was, at 5pm last night, trading around $1.4449, down by nearly 0.7 cents on its pre-weekend close in London of $1.4518.
And the euro was trading around 78.58p at 5pm, up by 0.56 pence on its pre-weekend close of 78.02p, as the online polls by ICM and YouGov showed the “out” camp in front ahead of the June 23 referendum.
The YouGov poll of 3,495 people, taken between June 1 and 3, showed 45 per cent would vote to leave the EU, up from 40 per cent in a comparable poll in early May. The proportion planning to vote to stay in the EU fell to 41 per cent from 42 per cent in the previous poll.
Meanwhile, 11 per cent of people were still undecided, while four per cent of those polled said they would not vote.
The ICM poll of around 1,750 people, taken between June 3 and 5, showed 48 per cent would vote to leave the EU, while 43 per cent wanted to stay in the free trade bloc.
Bookmakers have meanwhile shortened Brexit odds, with Betfair putting the chances at 31 per cent.
Darren Ruane, head of fixed interest at Investec Wealth & Investment, said: “The trade-weighted value of sterling has fallen by two per cent over the past couple of weeks in response to various polls showing that the Leave campaign in the Brexit debate is gaining momentum.
“The recent fall in sterling follows a period of significant weakness (-10%) from December to mid-April, as investors began to focus on the Brexit debate, and then strength (+6%) for six weeks, as the Leave campaign failed to find traction.”
He added: “Although bookmakers’ odds continue to show a victory for the Remain campaign, any signs that the vote’s result is closer than previously predicted is likely to affect the UK’s currency by the greatest amount relative to other asset classes. Currencies are often good barometers of international investors’ confidence in the economic outlook for a country.”
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