The pound on Thursday rallied to its strongest level against the dollar this year, just hours before Britain’s knife-edge vote on its future in the European Union kicks off.
Traders are betting heavily that voters will cast a ballot in favour of staying in the 28-member bloc, analysts said, despite opinion polls pointing to a neck-and-neck race.
“Markets seem to have almost entirely priced in a ‘Remain’ vote win, meaning that the market moves and volatility around the vote may be far less than many had expected,” Angus Nicholson, a Melbourne-based market analyst at IG, said in a commentary.
“Nonetheless, markets are still incredibly nervous and some sharp market moves are likely over the next 24 hours.”
In midday Tokyo trading the pound bought $1.4800, after briefly hitting $1.4844 -- its highest level against the US unit this year -- and up from $1.4737 Wednesday in New York.
Sterling also jumped to 154.84 yen from 153.55 yen on Wednesday, while it was at 1.3051 euro, from 1.3038 euros.
While two polls on Wednesday showed the “Leave” side with the slimmest of leads, bookmakers were giving a more decisive edge to the “Remain” camp.
“The pound is moving in tandem with what bookmakers are showing, which is clearly pointing to one direction,” Masafumi Yamamoto, chief currency strategist at Mizuho Securities, told Bloomberg News.
Full coverage: Britain’s EU Referendum
“But the rise in the pound now is no guarantee that the outcome of the actual result will show the stay camp prevailing.”
In other trading, the greenback rose to 104.62 yen from 104.51 yen in US trade, while the euro gained to $1.1339 and 118.65 yen from $1.1313 and 118.24 yen.