Sterling Soars After Latest Poll Favors Remaining in EU

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 [e-mail]

(END) Dow Jones Newswires

June 20, 2016 03:45 ET (07:45 GMT)

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