With less than 24 hours to go before the polls open for the UK’s referendum on membership of the EU, the pound rose past 1.47 dollars despite most opinion polls pointing to a very tight race.
Campaigning for Thursday’s referendum heated up today with both sides making a last ditch attempt to win over undecided voters. Senior figures, including former British PM John Major and current UK PM David Cameron on the ‘remain’ side, and UKIP leader Nigel Farage and Conservative MP Boris Johnson on the ‘leave’ side were active on the campaign trail on Wednesday on what is the final day of campaigning before voting opens tomorrow.
The pound surged against the dollar last Friday following the murder of Labour MP Jo Cox, who was a pro-EU supporter. The tragic event triggered a backlash against the ‘leave’ campaign after it was reported that her alleged killer could be linked to far-right extremists. This led to a drop in support for the Brexiteers in the opinion polls.
However, according to the latest poll of polls in the Financial Times, the ‘leave’ side have a slight lead with 45% versus 44% for the ‘remain’ camp. In contrast, a survey on the voting intentions of British Members of Parliament showed 73.5% of British MPs are planning on voting to stay in the EU, compared with 24.5% who will vote to leave. With the final public opinion polls before tomorrow’s referendum not expected to be published until 22:00 BST, markets were generally calm today with global stocks edging up.
London’s FTSE 100 index was up 0.6% in afternoon European trading, while the Frankfurt Dax was up 1.1%. The FTSE 100 has gained 5.2% since last Thursday when it fell to a four-month low as fears of a potential ‘Brexit’ had intensified after several polls showed growing support for Britain to leave the EU.
In the currency markets, the pound was trading at 1.4755 versus the dollar and at 154.30 against the yen. The euro meanwhile was sharply weaker at 0.7675 pounds. Sterling has gained 2.8% against the dollar so far this week as markets have become increasingly confident that the ‘stay’ vote will prevail on Thursday.
Investor optimism was also evident from the price of gold, which slipped for a second day, despite Fed Chair Janet Yellen’s dovish remarks on the outlook for US rates in her semi-annual testimony before Congress yesterday. Gold prices were down 0.2% at $1266.30 per ounce in afternoon European trading.
With no official exit polls planned for tomorrow’s referendum, markets will likely focus on the final opinion polls expected in the next few hours as an indication of the British public’s voting patterns. The polls are scheduled to open across the UK on Thursday at 07:00 BST and close at 22:00 BST. It is expected to be a long night though with the final outcome of the vote not declared until 07:00 BST at the earliest on Friday.
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