Pound falls to three-week low against dollar as opinion polls favour Brexit
The pound slumped to fresh lows in morning trading after two polls showed rising support among voters for leaving the European Union.
Sterling hit a three-week low against the dollar, falling as much as 0.9% to 1.43 US dollars. A YouGov poll showed that 45% of voters now favour Brexit, with 41% opting to remain. Brexiters were also ahead in an Observer/Opinium poll by 43% to 40%.
Craig Erlam, senior market analyst at Oanda, said more volatility should be expected over the coming weeks.
"The polls are likely to make people rather uneasy and we can see that quite clearly today in the pound, currently down almost 1% against the dollar, having hit three-week lows earlier in the session.
"With both sides likely to step up their game over the next couple of weeks, I imagine we'll see a lot more volatility in the pound, and the closer the polls get, or if "Vote Leave" continues to push ahead, the pound may find itself back towards April's lows before too long."
Several experts, including Bank of England governor Mark Carney, have warned that the value of sterling could plummet in the event of a Leave vote.
The economy had taken centre-stage in the debate until recently, with organisations such as the OECD, IMF and a plethora of economists and world leaders all warning that Brexit could batter the British economy.
However, polls suggest the Leave campaign's tactic of ramping up rhetoric on immigration is proving successful.
Pollsters will be working overtime in the coming weeks as newspapers, broadcasters and private institutions commission more surveys. However, experts believe this could lead to more volatility for the pound.
Hussein Sayed, FXTM chief market strategist, said: "It is becoming extremely worrying for the financial markets and we expect more sterling losses if polls continued to indicate a Brexit lead.
"From a technical perspective GBP/USD imminent support stands at 1.4330; however, don't expect the pair to respect any technical or fundamental indicators as polls will continue to dictate the move until June 23."
Asked about the fall of the pound following success for Leave in the opinion polls, pro-Brexit Conservative Boris Johnson said: "The pound will go where it will over the short term. But, believe me, in the long term you can look forward to fantastic success for this country.
"I think the pound's value will depend entirely on the strength of the UK economy."