Brexit: Sterling rises most since 2008 as Remain gains momentum

Sterling climbed the most since 2008 in early trading on Monday, spurring a global rally in higher-yielding currencies, as polls signaled the campaign for the UK to stay in the EU was gaining momentum.

Sterling's volatility diminished as surveys taken after the murder of pro-EU lawmaker Jo Cox showed Remain gaining lost ground.

A poll from Survation taken June 17th to 18th for the Mail on Sunday newspaper showed Remain backed by 45 per cent and Leave by 42 per cent, reversing positions from Survation's previous poll.

The pound gained at the end of last week after campaigning for this Thursday’s referendum was suspended following Ms Cox’s death.

She was shot dead on June 16th.

“Weekend polls suggested the tragic death of Jo Cox may be shifting some support back to Remain - that has helped risk sentiment a bit,” said Robert Rennie, head of currency and commodity strategy at Westpac Banking Corp. in Sydney. “The polls are also driving the move away from safe-haven currencies.”

Risk on

Sterling climbed 2 per cent to $1.4648 shortly after 9am on Monday, the biggest gain since December 2008.

A one-week gauge of implied volatility for the pound versus the dollar dropped to 37.2 per cent from a record close of 47.9 per cent in the previous session.

Hedge funds and other large speculators have cut bets on a sterling decline versus the dollar, known as net shorts, in the week ended June 14th from a three-year high the previous week, according to data from the Commodity Futures Trading Commission in Washington.

The Bank of England and International Monetary Fund reiterated warnings last week about the economic risks of Britain quitting the world's largest single market.

British prime minister David Cameron entered the final week of campaigning ahead of the referendum with an accusation that his opponents are trying to deceive people into voting to leave.

Campaigning had been suspended for two and a half days following Ms Cox’s murder, Sunday saw both sides return to the fray.

The probability of a vote to Leave has declined to about 30 per cent from almost 40 per cent on June 15th, according to bookmaker figures processed by the Oddschecker website.

A survey by YouGov for The Sunday Times, a third of which was conducted before the attack, showed Remain at 44 per cent and Leave with 43 per cent.

The pollster said it doubted the rise in backing for the EU was tied to Cox's killing and suggested it may relate more to concerns about what Brexit would mean for the economy.

"The markets have always been more comfortable with the U.K. remaining in the European Union, hence the boost to risk sentiment now that the 'Remain' camp's campaign appears to be back on track," Kathleen Brooks, London-based research director at Gain Capital Holdings, wrote in a note.

Bloomberg