Pound Rises on Evidence EU ‘Remain’ Campaign Is Gaining Ground

The Brexit Debate: What Happens if the U.K. Leaves the EU
  • Sterling boosted by poll showing older voters switching sides
  • Market views likelihood of Brexit as ‘relatively low’: BTMU

The pound rose for the first time in three days amid evidence that the campaign to keep Britain in the European Union is gaining strength.

The U.K. currency climbed versus all of its 16 major peers after a poll published late Monday showed that older voters, previously found to back leaving the bloc, are switching sides. Sterling reached a more than three-month high versus the euro as Bank of England Governor Mark Carney told lawmakers that the June 23 referendum is creating “substantial” uncertainty for the economy, while insisting he has a responsibility to highlight risks.

The currency was strong “prior to his speech anyway” and Carney’s comments are “adding to upside pressure on the pound,” said Neil Jones, head of hedge-fund sales at Mizuho Bank Ltd. in London. “He’s reiterating the risk of Brexit. The market links these official voices to increases in the Bremain camp.”

Sterling extended its rally from February’s seven-year low versus the dollar to more than 5 percent in a sign the increasingly dire warnings about the nation’s prospects outside the world’s biggest single market are cutting through. The diminishing risk of an EU exit has prompted Invesco Asset Management Ltd. to maintain bets on sterling gains versus the dollar, according to London-based money manager Sean Connery.

Pensioners Switch

The shift in opinion among pensioners, who are more likely to vote than the young and are therefore key to the campaign, was the most notable part of the the ORB survey for the Daily Telegraph newspaper, which also showed that more Conservatives are starting to back “remain.”

Sterling jumped 0.9 percent to $1.4618 as of 4:32 p.m. in London, doubling its advance after Carney’s testimony to parliament. It gained 1.5 percent to 76.27 pence per euro and touched the strongest level since Feb. 4.

“The pound is reacting with a lag to the news overnight,” said Lee Hardman, a foreign-exchange strategist at Bank of Tokyo-Mitsubishi UFJ Ltd. in London. The latest poll “shows widening support for remain. That’s reinforcing the market’s view the likelihood of Brexit is relatively low, and that’s helping the pound to rebound.”

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