After more than 24 hours of conflicting polls, spiking currency volatility and suspected fat fingers, sterling is back above where it ended last week.
With just 15 days before the UK votes on whether to remain in the EU, expectations for swings in sterling over the coming month climbed to a fresh seven-year high.
Sterling jumped more than 1% against the dollar in about one minute yesterday just after 2pm in Tokyo, with a trader speculating that a mistyped transaction had triggered automatic orders to sell or buy currencies to avoid losses.
The previous day the pound was pushed up to 1.1% lower after polls signalled a lead for voters who support leaving the 28-nation bloc in the June 23 referendum.
“Taking a stance on what is going to happen on June 23 and sticking with it between now and then is just not a way you can trade sterling,” said Adam Cole, head of global foreign-exchange strategy at Royal Bank of Canada in London.
Sterling climbed 0.9% to $1.4571, having earlier touched $1.4660, its highest level this month.
It strengthened 1% to 77.87 pence against the euro. Sterling’s climb comes after it dropped in early trading on Monday, as three polls were released showing more UK voters favour quitting the EU than staying.
Two more surveys that came later the same day showed slim leads for the Remain camp.
At the UK’s sale of 30-year gilts yesterday, investors bid for 1.37 times the debt offered, the lowest bid-to-cover ratio since 2007.
As Brexit risks become more imminent, traders and market operators around the world are preparing for the decision.
Margin requirements are getting raised, bank traders will be working overnight in London, and investors from Thailand to Boston are waking up to how their positions may be affected if the UK chooses to leave the trading bloc.
Sterling has been a gauge of sentiment throughout the referendum debate. It slid to a seven-year low of $1.3836 in February, and remains the worst performing developed-market currency this year.
“We expect Remain, but the issue is the polls are really, really close,” said David Owen, chief European economist at Jefferies International.
Brexit meets sterling: A chart https://t.co/hQpzBcDxSP— Financial Times (@FinancialTimes) June 7, 2016
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