British pound soars to 2016 peak near $ 1.50

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London | Published: June 23, 2016 10:25:27 PM

Britain's pound raced today to its highest dollar level this year, propelled by renewed hopes the world's fifth biggest economy will remain in the EU in a closely-fought referendum.

British poundIn afternoon London trade, the pound stood at .4790 as profit-taking set in. It also pulled back to stand at 76.69 pence to the euro.(Reuters)

Britain’s pound raced today to its highest dollar level this year, propelled by renewed hopes the world’s fifth biggest economy will remain in the EU in a closely-fought referendum.

The pound surged in morning deals to $ 1.4947 — its highest level since December 28 — as Britons headed to the polls in a hotly-contested in-or-out EU membership vote. Results are due early Friday.

Sterling hit the pinnacle in frenetic foreign exchange activity as a new Ipsos MORI opinion poll put “Remain” on 52 per cent and “Leave” on 48 per cent.

The British currency also struck a three-week high point at 76.23 pence to the euro.

Traders appear increasingly confident that Britons will decide against pulling out of the 28-nation bloc, but sterling stopped just short of $ 1.50. Bookies are also putting their money on Remain.

“The market is now fully expecting a win for the Remain camp,” City Index research director Kathleen Brooks told AFP.

“The sharp upswing towards $1.50 was also reflective of what was going on with the EU referendum odds.

“The market that looks at the margin of victory for the Remain camp started to price in a win for Remain by a fairly decent margin.”

In afternoon London trade, the pound stood at $1.4790 as profit-taking set in. It also pulled back to stand at 76.69 pence to the euro.

Nick Stamenkovic, macro strategist at RIA Capital Markets, added the prospect of a Remain vote was boosting the pound for two main reasons.

Firstly, investors were unwinding their trading positions made in anticipation of a potential Brexit — or British exit from the 28-nation bloc.

And secondly, a Remain outcome would curb the chances of an economic shock that might otherwise have prompted easier monetary policy from the Bank of England (BoE).

“Mounting expectations of victory for Remain prompted an unwinding of Brexit hedges, boosting the pound,” Stamenkovic told.

He added: “A vote for Remain would lessen the chances of a BoE easing, as uncertainty over the UK economy diminishes, lifting the pound.”

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