Pound Double Top Points to $1.40 for IG as Brexit Risk Weighs

The pound could drop back to $1.40 before the U.K.’s referendum on its European Union membership, trading patterns suggest.

Sterling is close to the neckline at $1.4333 of a double top formed in May, according to IG Markets Ltd., after the currency dropped as much as 1.1 percent to $1.4353 Monday. The pound was the worst performer among its major peers after support for the ‘Leave’ option overtook the ‘Remain’ camp for the first time in a poll for ITV, with less than three weeks to the June 23 referendum.

“If a ‘Leave’ vote comes to fruition, the pound is going to get hit very, very hard,” said Chris Weston, chief market strategist at IG in Melbourne. “There’s no joy in being long the pound if we really do get a sense that the ‘Leave’ camp is going to get the upper hand.”

The pound was 0.8 percent lower at $1.4396 as of 12:27 p.m. Monday in Tokyo.

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