The pound plunged in Asia on Friday as the U.K. referendum to stay or leave the European Union appeared too close to call with volatile trade across markets.
GBP/USD dropped 4.55% to 1.1497 as the results hung in the balance, while the euro fell 1.67% to 1.1193. USD/JPY eased 1.83% to 104.28 as investors sought safe-have currencies and AUD/USD dropped 1.59% to 0.7496.
Initial results in the U.K.'s referendum on membership of the European Union shook markets' earlier conviction that the Remain camp was on the way to victory.
The shock came from a crushing victory for Leave in Sunderland in the north-east of England, and only a narrow win for Remain in the neighbouring City of Newcastle. The results were markedly stronger for Leave than pundits had expected, but they may just be an early indicator of widely divergent regional voting patterns.
Leave won 61.3% of the vote in Sunderland and 49.3% in Newcastle.
Political leaders and officials, with the exception of UK Independence Party leader Nigel Farage, have avoided forecasting the result.
"I think that Remain might just nick it," Farage said.
The campaign evidence is that swathes of London have been solidly Remain. Against this there have been plenty of anecdotes of unhappy Labour politicians, who have seen strong Leave turnout in some of their traditional northern heartlands.
The Labour leadership backed Remain, while distancing itself from the stay campaign spearheaded by the Conservative leadership.
The U.S. dollar index, which measures the greenback’s strength against a trade-weighted basket of six major currencies, surged 1.68% to 94.90.
Overnight, sterling and the euro pulled back from the day’s highs on Thursday amid jitters over the outcome of the historic referendum on whether the U.K. should remain in the European Union.
The pound hit the day’s highs after an opinion poll, conducted by polling company Ipsos MORI for the Evening Standard newspaper, indicated that the remain campaign was in the lead as voting continued in the landmark referendum.
The Ipsos MORI poll showed that that 52% of voters wanted to remain in the EU, compared to 48% in favor of Leaving. Sterling had already reviewed a boost late Wednesday after opinion polls indicated that support for the Remain campaign edged into the lead.
Polling stations will close at 10 p.m. London time and final results are due at around 7 a.m. London time.
Investors fear that a Brexit vote would hit global stocks, bonds and currencies, in particular the pound, which some analysts have predicted could slump by 15%.
Reuters reported Thursday that finance leaders from the G7 nations will issue a statement stressing their readiness to take all necessary steps to calm markets in the event of a Brexit vote.
Rating agency Standard and Poor’s said Thursday that Britain’s triple A credit rating would be downgraded within a short period of time if the U.K. were to exit.
In the U.S., data showed that initial jobless claims fell less than expected last week.
The Labor Department said the number of initial jobless claims fell to 259,000 in the week ending 18 June, from 277,000 a week earlier. It was the largest decline since February and not far from a 43-year low hit in March.
Economists had forecast a more modest drop to 270,000. Another report showed that U.S. new home sales declined 6.0% in May, after hitting a more than eight-year high in April.