Optimism about the prospects of Britain voting to remain in the EU on Thursday has pushed sterling into its biggest gain against the dollar in eight years as polls show support for Brexit in decline.
The FTSE 100 closed up 3 per cent at the end of a day which saw big gains for shares in banking and construction, both sectors perceived as likely to suffer if Britain leaves the EU.
An ORB poll for the Daily Telegraph on Monday night showed a surge in support for Remain, with 53 per cent of those certain to vote saying they will back remaining in the EU, compared to 46 per cent backing Brexit. The same poll a week ago gave Leave a one-point lead and the shift in support towards Remain reflects a trend seen in other recent polls.
Chancellor of the exchequer George Osborne warned on Monday night that there would be immediate capital flight from Britain if it voted to leave.
“On Friday morning you will see the first reaction in the financial markets because they’ve placed all these bets that they will move money out of Britain if Britain votes to Leave,” he told LBC radio.
The market rally came as the Leave campaign continued to face criticism for its rhetoric on immigration, after Conservative peer Sayeeda Warsi announced she was switching her allegiance to Remain. Baroness Warsi said she could no longer support a campaign based on "lies and xenophobic campaigning".
Campaigning in the referendum has been more muted since the murder last week of Labour MP Jo Cox, who was remembered during a sometimes tearful special sitting of the House of Commons. MPs from all parties paid tribute to the first-term MP from West Yorkshire, a mother-of-two who would have celebrated her 42nd birthday today.
As Ms Cox's husband Brendan and their two children watched from the public gallery, Labour MP Rachel Reeves broke down as she spoke of her friend. "It is ironic that after travelling the world to some of the most damaged, war-ravaged places, Jo died so near to her home. But she died doing the job that she loved, in the place that she loved, representing the people she loved," she said.
A fund set up in Ms Cox’s name to support three of her favourite charities has attracted almost £1 million in donations and a public celebration of her life will be held in London’s Trafalgar Square on Wednesday.
Ukip leader Nigel Farage accused the Remain campaign of politicising Ms Cox's murder to gain advantage. Mr Farage said those opposed to Brexit were seeking to conflate the motives of the person who killed Ms Cox with those of the campaign to leave the EU.
“There are one or two in the Remain camp who have tried to say that the motives of that man were somehow whipped up by a Leave campaign that had fought on a nasty and hateful agenda. I want to say: that man acted in isolation. What that man did was an act of barbarism” he told a rally in Gateshead last night.