Sterling slips again after latest opinion polls show strong support for Brexit

Jake Cordell
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People Enjoy Bank Holiday Monday At Thorpe Park
Scared to look: The latest opinion polls have not made easy reading for fans of the UK's membership of the EU (Source: Getty)

The pound has yet again borne the brunt of the twists and turns of the EU referendum campaign, with another big drop in the value of the currency today after more opinion polls showed the Leave side on top.

Sterling has lost 0.7 per cent against the US dollar today, falling to a three-week low of $1.4406, even as weak data in the US pushed back expectations of an interest rate rise on that side of the pond.

A survey for ITV by YouGov, out at midnight last night, put support for leaving the EU at 45 per cent, while Remain came in at 41 per cent. That was a reversal from the same survey last month, which had Brexit backers on just 40 per cent, with Remain ahead on 42 per cent.

Another online poll out this afternoon from ICM gave the Leave side a six-point gap once undecided voters are stripped out.

Digging into the detail, surveys have not made easy reading for Remainers, who may have thought they were home-and-dry after taking double-digit leads following the string of Brexit recession warnings from Mark Carney, Christine Lagarde and George Osborne.

More than two-fifths of voters told YouGov they would still vote to leave the EU even if they knew it would make them £100 a year worse off. That was up from just over one-third back in April, and could be a sign that the In camp's relentless focus on the economy is misfiring - or that Vote Leave's big push on immigration last week has paid dividends in terms of shifting the debate.

Over the weekend, bookies once again cut the odds of the UK voting to leave to around 9/4 - well off the 4/1 reached two weeks ago.

Volatility in the pound also hit a new seven-year high overnight, reaching 21.6 per cent according to Bloomberg, up from levels of around ten percent earlier this year. The spike represents the fact that one-month options and futures contracts now go past the date of the vote and so are incorporating the possibility of sharp currency movements over the next 30 days.

Read more: What time will the EU referendum result be announced?

The fall against the dollar is even more stark given Friday's disappointing jobs figures which effectively killed off the prospect of the US Federal Reserve hiking interest rates in June. That should, in theory, have weakened the dollar against other currencies.

Sterling was also down by 0.7 per cent against the euro at €1.2683. At the end of May the pound was trading above €1.31.

City economists and currency traders polled by City A.M. think the pound will fal to around $1.40 by the time of the referendum.

Darren Ruane of Investec Wealth and Investment said: "Although bookmakers’ odds continue to show a victory for the Remain campaign, any signs that the vote’s result is closer than previously predicted is likely to affect the UK’s currency ... Currencies are often good barometers of international investors’ confidence in the economic outlook for a country."

A little over two weeks remains until the vote and the pressure on sterling has just been taken up a notch. I originally thought that we had seen the lows on the pound-to-dollar pre-referendum, but if the Leave camp remain in poll position with a week to go, combined with low liquidity, we could see a real crack lower.

- Jeremy Cook, chief economist, World First

Jasper Lawler, a market analyst at CMC markets said attention was shifting towards the politics of the vote, which could cause a challenge for the In team: "The Remain campaign is running out of global institutions to lean on with dire economic forecasts in the event of a Brexit, so the momentum could remain with the Leave camp over the next week or so."