At the close: Remain relief rally starts early as FTSE 100 climbs ahead of Brexit vote

Jake Cordell
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Weather was expected to be drizzly during tomorrow's vote. However, that didn't hold back traders from pushing the markets up on Thursday
Weather was expected to be drizzly during tomorrow's vote. However, that didn't hold back traders from pushing the markets up on Thursday (Source: Getty)

Perhaps all the decision makers were taking a breather. Maybe the big sellers have switched onto nights ahead of tomorrow. Or, has everybody in the City had enough of referendum news and just decided to ignore the potentially tumultuous event about to take place?

There were just a few of the questions being asked to try and explain today's rally in the FTSE 100 and the jump in the pound.

With opinion polls still showing it'll be the don't knows that will carry the day, the bluechip index hit a two-week high, passing 6,300 in late afternoon trade, although fell back by the finish to close at 6,261.19.

Brexit Britain: What you need to know

The intra-day high of 6,315.54 was a 1.2 per cent climb and marks a 400 point assault since last Tuesday.

In a sign that investors have had enough of safe havens, it was banks and financials that topped the list of climbers for a second day running. Hargreaves Lansdown, perhaps ahead of a busy night's trading tomorrow, jumped 4.1 per cent, while Old Mutual, Standard Life and Provident also climbed by three per cent.

22 June 2016 @ 4:30pmFTSE 100 (UKX)

"Remarkably, the index finds itself within touching distance of its June high," Chris Beauchamp at IG said, "a clear sign that investors at least are relatively confident that the UK will vote to remain in the EU."

The pound marched higher throughout the day, peaking at $1.4766 before dropping back. Opinium's final opinion poll which showed the Leave side ahead by one point at 45 per cent to 44 per cent, shook the currency a little in the afternoon session. When the stock markets closed, however, the pound was still up by 0.2 per cent at $1.4681.

Sterling volatility seems to have run its course ahead of the vote, analysts said, as they were divided on whether the currency would jump on a Remain vote, or if the latest movements were actually the beginning — and end — of the relief rally.

Read more: Declaration times to expected results: The definitive guide to EU referendum night

"Sterling is now at roughly the same level against the US dollar as it was at the turn of the year ... this suggests that much of the pound's prior Brexit-related weakness against the dollar has already been unwound, so scope for a rebound may prove fairly limited following a vote to Remain," said Oliver Jones, assistant economist at Capital Economics.

Hargreaves Lansdown, however, said it "expected an immediate relief rally in the event of a Bremain vote [since] the market is already pricing in some change or Brexit, and when we get confirmation one way or the other, we can expect stock prices to swing up or down."

The latest bookmakers odds put the chances of a vote to Remain at 75 per cent.