Sterling has crashed against the dollar over the last 48 hours after a smattering of opinion polls raised the chances of the UK voting to leave the EU.
The pound was trading at $1.4428 this lunchtime, down more than three cents on the highs of $1.4739 reached last week as traders said volatility was going to increase markedly during the final three weeks of the referendum campaign.
What was thought to be a shock poll from ICM yesterday, which gave the Leave side a four-point lead over Remain, was followed today by a YouGov survey which put the two sides level on 41 per cent, with one in eight people still undecided.
The surge in support for the Leave side comes after a week which saw the Remain stretch its lead into double-digits after Mark Carney, Christine Lagarde and George Osborne all said Brexit could trigger a recession.
Analysts said the complacency of currency traders had been dented by these fresh polls, as bookmakers began cutting odds on the prospect of Britian voting to leave the EU. Leave is now a best price of 11/4 - down from 4/1 last week.
Jameel Ahmad, chief market analyst at FXTM said:
“I think that investors were generally beginning to underprice the possibility of a UK exit as if it was a forgone conclusion that the UK would automatically vote to remain in the EU … All of the risks for the pound are still pointing strongly to further weakness.”