Sterling Soars After Latest Poll Favors Remaining in EU
June 20 2016 - 4:00AM
Dow Jones News
The U.K. pound surged on Monday after an opinion poll over the
weekend suggested there had been a swing toward a preference for
Britain staying in the European Union ahead of Thursday's
referendum on membership.
A survey published in the Mail on Sunday newspaper showed 45% of
respondents backed staying in the trade block, versus 42% in favor
of leaving.
Sterling soared as much as 1.6% against the dollar in response,
before giving up some of its gains to trade at 1.4574 against the
dollar in early European trading. It was at $1.4358 late Friday in
New York. Against the euro the pound was at 0.7786.
"This is a fairly short-term movement. I think [the pound] can
still move in either direction," said Kosuke Hanao, head of FX at
HSBC in Tokyo.
The pound could come under selling pressure if another poll
points to the opposite outcome, said Osao Iizuka, head of FX
trading at Sumitomo Mitsui Trust Bank. "This isn't the type of
movement that could become a trend," he added.
Some investors have been betting the pound could be hit by
possible trade and economic disruptions that would result from a
U.K. exit. Possible steps by the Bank of England to increase
liquidity in an exit scenario could also weigh on the currency.
But the trading picture may not be so simple. If the U.K. votes
to exit, a sharp fall in the pound and a jump in safe-haven
currencies such as the Japanese yen and the Swiss franc could
trigger coordinated international currency intervention, dealers
say.
"I think the initial reaction may be selling [of sterling], but
there would be fluctuations in the case of an exit," Mr. Hanao
said.
The pound rose to a one-week high of 152.69 against the yen on
Monday from 149.55 late Friday in New York. Against the Swiss franc
it climbed to 1.3981, the highest since June 8, from 1.3785.
Mr. Iizuka of Sumitomo Mitsui Trust said the pound could be
subject to selling pressure should the U.K. vote to exit, as some
banks and manufacturers could decide to leave the country.
Write to Kosaku Narioka at kosaku.narioka@wsj.com
(END) Dow Jones Newswires
June 20, 2016 03:45 ET (07:45 GMT)
Copyright (c) 2016 Dow Jones & Company, Inc.
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