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Pound soars on easing Brexit fears; polls show tight race

/ 07:08 AM June 21, 2016

Pound-Sterling

NEW YORK, United States — The pound soared against the dollar and euro Monday on easing fears that Britain will vote to break with the European Union, as recent polls showed growing support for staying in the EU.

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“Today’s rally for the pound could be just the tip of the iceberg if Britain should vote to remain in the EU, an outcome that would remove a substantial amount of uncertainty that for months has weighed on the UK currency,” said Joe Manimbo of Western Union Business Solutions.

Three days before the critical referendum, the pound jumped 2.3 percent to $1.4675. It surged roughly two percent to 77.08 pence per euro.

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Analysts cautioned that sentiment on Brexit likely would be volatile amid the heated rivalry of the campaigns, with the “leave” and “remain” camps running neck-and-neck, according to poll results released over the weekend.  

The dollar meanwhile weakened against the yen as well.

Markets will also be on the watch for Federal Reserve Chair Janet Yellen’s semiannual monetary policy report to Congress on Tuesday and Wednesday.

The US central bank stood pat on policy last Wednesday in part due to Brexit concerns, and lowered its path for US rate hikes.

“Chair Yellen may largely endorse a wait-and-see approach amid the uncertainties clouding the economic outlook, and more of the same from the central bank head may encourage market participants to push out bets for the next rate hike,” said David Song at DailyFX.

With three days to go until Britain votes on whether to exit the European Union, the Leave and Remain camps are in a virtual dead heat, new polls indicated on Monday.

Britain votes on Thursday whether to leave the 28-member bloc, a referendum that may determine the political and economic fate of Europe.

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A poll for the Daily Telegraph showed the “Remain” side on 49 percent support, unchanged from a week earlier, while “Leave” was up three points to 47 percent.

The result, based on a survey of 800 people by polling company OBR international, gave the pro-EU side a lead of two points, its slimmest since OBR began polling in March.

Another poll by YouGov for The Times showed the “Leave” side overtaking the Remain camp, according to results released on social media by the newspaper’s deputy political editor Sam Coates.

Those in favor of a Brexit now had 44 percent support, up one point, versus 42 percent who wanted to stay in the bloc — a drop of two points.

Political strategist Lynton Crosby wrote in the Daily Telegraph that the ORB poll indicated the result would “truly come down to the wire”.

“The referendum outcome is uncertain. I wish Britain the best,” Crosby wrote.

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