(Jun 6 Monday Bloomberg) The pound dropped to a three-week low after the polls showed more Britons favored quitting the European Union, reviving concern the June 23 referendum will throw global markets into turmoil and undermine confidence in the 28-nation trading bloc.
Sterling fell against all of its developed-market peers after surveys showed a lead for the 'Leave' campaign. While the pound pared its slide in London trading, a gauge of anticipated swings against the dollar in the next month surged to a 7 1/2 year high.
The Bank of England has said uncertainty surrounding the vote is hurting U.K. growth, while institutions including the International Monetary Fund and Organisation for Economic Cooperation and Development have warned of dire consequences if the nation votes to leave the world's largest single market. Federal Reserve Bank of Chicago president Charles Evans said the referendum is undermining confidence in the global outlook at a time when the international economy is already losing momentum.
"Today's move was a function of reality sinking in for overseas investors - the referendum will be a close outcome," said Viraj Patel, a foreign-exchange strategist at ING Groep NV in London. "We're probably seeing some of those long post-Brexit pound bets unwind."
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