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Pound continues to rally as City gambles on Remain victory

Published 21/06/2016

The pound's value rose again against the dollar
The pound's value rose again against the dollar

The pound has bounced back to its highest level since the start of the year as the City bets on Britain voting to remain in the EU.

Sterling hit 1.478 US dollars at one stage - its highest level since January 4 - building on the surge seen on Monday, when it notched up its biggest one-day gain against the dollar for nearly eight years.

The pound has now surged by 4% over the past three days, helping it reclaim all its losses seen since the start of the year - despite mixed results from the latest referendum polls.

Traders and bookmakers are increasingly betting that Britain will vote to stay in the EU, with Ladbrokes saying late on Monday that the odds for a Remain vote suggested a 74% chance that the UK will choose in favour of the 28-member bloc.

But the wider London market paused for breath, up just 4.3 points at 6208.3, after Monday's 182.9-point jump - which saw more than £47 billion added to the value of UK blue chips.

The pound's gains mark a rebound from two-month lows against the dollar and the euro seen just a week ago when Brexit fears sent it plunging.

Tuesday's rally comes after a survey of 800 people by ORB put "Remain" at 53%, although a YouGov poll of 1,652 voters published late on Monday showed "Leave" at 44% and 42% for "Remain".

ETX Capital said it believes there is a 75% probability that the Remain campaign will win.

But ETX head of trading Joe Rundle warned there was still "huge uncertainty" for markets and the City over the coming days.

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

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