The sterling jumped 1.4% to 1.4560, after reaching the high of 1.4625 earlier, extending its recovery from last Thursday’s two-month low of 1.4013. The single currency lost 0.8% to 77.94 against the cable.
Market participants were optimistic, after three of six opinion polls released over the weekend indicated a shift towards keeping Britain in the European Union. Last week’s murder of pro-EU lawmaker Jo Cox has influenced some polls towards the ‘Remain’ camp, although the electorate is narrowly divided.
Even before these polls, statistics from the Commodity Futures Trading Commission revealed on Friday that currency speculators reduced their net short positions against the British pound last week.
Signalling a general boost in risk appetite, US stock futures advanced 1.1%, preparing the ground for a positive open on the stock exchange later in the day. Elsewhere, MSCI’s index of Asia-Pacific shares outside Japan rose 1.4%, while Japan’s Nikkei index surged 2.4%, causing the yen to fall across the board.
Japanese Finance Minister said on Friday that he was concerned about one-sided, speculative currency movements and that he would react instantly if needed,
signaling a possibly yen-selling market intervention.
Earlier on Monday, official statistics from Japan indicated that the country’s exports dropped at the fastest pace in four months last month, as a consequence of chain disruptions from the Kumamoto earthquake and slowing economic growth in emerging markets.
The IMF stated on Monday that the recent yen appreciation would be a hurdle to Japan’s exports. It prompted officials to reinforce income policies and the labour market reform with further monetary and fiscal stimulus.
The greenback edged higher 0.5% to 104.66 against the yen, pulling away from Thursday’s nearly two-year low of 103.55 reached after the BoJ announced its decision to leave monetary policy unchanged.
The single currency climbed 1.3% to 118.87 against the yen, much higher than Thursday’s three-year low of 115.51. The euro also rose 0.7% to 1.1358 against the dollar, pushing the US dollar index down 0.6% to 93.598.
The Aussie, usually falling in times of increased risk aversion, rose 0.7% to 0.7446 against the yen, while inching up 1.2% to 77.93 against the yen.
Ahead of the EU referendum, Fed Chair Janet Yellen will appear before lawmakers in the US House of Representatives on Wednesday to talk about monetary policy and the health of the economy.