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Sterling surges after polls give Remain camp one-point lead

Published 07/06/2016

Euro notes and pound notes.
Euro notes and pound notes.

Sterling has surged against the dollar and the euro after fresh polls put the Remain camp in the lead ahead of the EU referendum .

The value of the pound rose more than 1% against the dollar at 1.46, and it was up 0.9% against the euro at 1.283.

The swing away from the three-week low against the dollar seen on Monday came after support for staying in the EU was given a one-point lead in an online YouGov survey for The Times, and a telephone poll by ORB for the Daily Telegraph.

However, some analysts have questioned whether the currency movement could have been partly caused by a "fat finger trade" - an order to buy or sell which is larger than intended.

Senior market analyst Craig Erlam, at OandA, said: "The two polls overnight have lent support to the pound early in today's session, although the spike from around 1.4480 to 1.4640 shortly after 5am in the UK has been attributed to a fat finger trade.

"Still, the pound is currently trading around 1.45 against the dollar, up around 0.5% on the day, reversing the majority of Monday's losses. With the polls pointing to a very tight race, the next couple of weeks could become increasingly volatile for the pound."

Spreadex analyst Connor Campbell said the fading prospect of an imminent US interest rate hike had also triggered the rally.

He added: "The pound has seen a rather impressive comeback following its post-Brexit poll lead pummelling ahead of the June 23 referendum.

"Cable is now back above 1.45 US dollar, having hit 1.435 US dollar yesterday, though that may also be in part due to a speech from Federal Reserve chair Janet Yellen on Monday that shifted the potential of a rate hike to July - still unlikely - or September, a date complicated by its proximity to the US election."

S terling hit a three-week low against the dollar on Monday, falling as much as 0.9% to 1.43 US dollars.

The move was sparked by a YouGov poll which showed 45% of voters favoured Brexit, with 41% opting to remain. Brexiters were also ahead in an Observer/Opinium poll by 43% to 40%.

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