The British pound was rocked by volatility early this week after three separate polls indicated that more Britons would vote to leave the EU than would vote to remain in.
A YouGov poll suggested that 45% of Britons would vote to leave the European Union when the country goes to the polls on June 23. Only 41 percent said they would vote to remain in.
Another poll by TNS showed that 43% favored leaving while 41% would vote to stay. An online poll of 2,000 people by ICM revealed a strong 48% would vote to leave while 43% said they would vote to remain.
Sterling fell heavily against the US dollar, at one point losing as much as 1.5 cents to $1.4353 in the immediate aftermath of the YouGov and TNS polls’ release. It recovered slightly but fell again after the ICM poll was published.
“Sterling hasn’t seen this kind of volatility since the end of the global financial crisis,” said Softbank CIBC International’s chief economist, Rashid Armara. “With just over two weeks to go before the vote, it appears that the Remain campaign has a comfortable lead but the Leave movement is gaining support. Ultimately, we believe Britain will stay in but it won’t be a landslide,” he added.
Sterling weakened because investors, in general, believe that the country’s best economic prospects are tied to its continued presence within the world’s largest trading bloc. Deep divisions exist primarily on immigration and the perception that the country has less control over law-making.
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