Friday 21 October 2016

Pound tumbles as strength of Leave EU vote rattles markets

Published 24/06/2016 | 02:30

A man wearing a Europe-themed cycling jersey arrives to vote at a polling station for the referendum on the European Union in north London yesterday. Photo: Reuters
A man wearing a Europe-themed cycling jersey arrives to vote at a polling station for the referendum on the European Union in north London yesterday. Photo: Reuters

The pound plummeted against the dollar in the early hours of this morning as early results in the UK-EU referendum put the crucial vote on a knife-edge.

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Sterling tumbled against all its counterparts in Asian trading after a particularly strong result for the Leave side in Sunderland.

The UK currency collapsed as far as $1.4300 at one stage, having earlier stretched to a high for the year at $1.5022. The pound had earlier been pushed up as early opinion polls indicated a victory for the Remain camp.

But the pound's gains quickly reversed in the wake of the Sunderland result after midnight.

Financial markets have been racked for months by worries about what Brexit, a British exit from the European Union, would mean for Europe's stability.

Early opinion polls had favoured the Remain camp.

An Ipsos Mori poll put the lead at eight points while a YouGov poll found that 52pc of respondents said they voted to remain in the EU, while 48pc voted to leave. But as the results trickled in, they painted a picture of an extremely tight result.

"Newcastle was a squeaky win for Remain but Sunderland was a huge kick in the ribs and the bottom has fallen out of the pound," said Jeremy Cook, chief economist at international payments company, World First.

"These markets are thin, liquidity is poor and a recovery is obviously possible but those traders who were looking to book a quick profit before a restful night's sleep have had their ideas shattered."

The pound has fluctuated vigorously since the start of the campaign in February, acting as a barometer for sentiment and reflecting the side of the debate in the lead.

It dropped to a seven-year low that month when former London mayor Boris Johnson announced his support for Brexit. Just last week, it was as low as $1.4013 when the Leave camp appeared to be ahead.

Meanwhile, the bookies have had a flurry of activity on the outcome of the crucial poll.

Over €82m of bets on the referendum were matched on the Betfair betting exchange by yesterday evening, with the vote shaping up to have been a record breaker for bookies.

Ladbrokes confirmed that it has taken "millions" of pounds in bets in the 24 hours leading up to yesterday's poll. "It is already our record non-sporting event," said a spokesman.

He said that the referendum had also broken records for the recruitment of new customers, and that visitor traffic to its dedicated referendum web page has surpassed one million.

The spokesman declined to reveal the precise amount staked on the EU referendum by Ladbrokes' customers.

A spokesman for William Hill said that, as of early yesterday, the 2014 Scottish independence referendum remained the group's single biggest political betting event, however.

"That may or may not change when we count up all the (Brexit) bets," he said. "We're getting close to that now."

He added that in the Scottish referendum, one William Hill outlet took a single bet of £900,000 from a punter who reckoned that Scotland would remain in the union.

Two-thirds of all the money staked on the referendum at William Hill had been for a 'remain' result, but 70pc of all individual bets placed were for 'leave'.

Irish Independent

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