Pound Rises Further Ahead Of EU Referendum

Sterling has soared to its highest level since the start of the year, as polls suggested a boost for the Remain campaign in the EU referendum.

The pound continued to rise to just over $1.47, building on its biggest one-day surge against the dollar for nearly eight years on Monday.

Last week, sterling was trading closer to $1.41, after polls appeared to indicate the Leave campaign was taking the lead.

"Some of the recent events have been favourable for Britain to remain in the EU, but it’s still too close to call," Manuel Oliveri, currency strategist at Credit Agricole (Swiss: ACA.SW - news) said.

"If Remain wins, we expect sterling to rise to $1.55," he added.

But the stock markets have calmed, reflecting a more cautious stance by investors.

The FTSE 100 index fell 0.1% after gaining more than 3% on Monday, which saw £47bn added to the value of the UK’s blue chip share index.

Whitbread (LSE: WTB.L - news) , which owns Costa Coffee and the Premier Inn hotel chain, saw the biggest jump in share prices, up 4%.

House-builder Berkley Group was among the biggest fallers in the London-based market, down 2%.

Bookmakers and traders are hedging their bets on the UK voting to remain in the EU, with Ladbrokes saying the odds for a remain vote stand at 74%.

ETX Capital (Other OTC: CGHC - news) believes there is a 75% probability that the Remain campaign will win, but head of trading Joe Rundle has warned the accuracy of polls cannot be relied upon and there is still "huge uncertainty" for markets.

"Traders betting the farm on a sterling rally happening on Friday should remember just how wrong the tolls were at the last general election and just how far the pound could drop if Britain votes out."

The chief strategist at CMC Markets (LSE: CMCX.L - news) in London, Michael Hewson said: "Financial markets appear to be taking the view that the race may well already be run, which given the twists and turns seen already in this campaign may well be extremely far sighted, or dangerously premature."

:: Time To Decide: A special programme on the eve of the EU referendum with Dermot Murnaghan on Wednesday from 10pm

:: In Or Out: Get all the results and reaction from the EU referendum from 9.30pm on Thursday