Sterling Hit After Survey Puts Brexit Camp 10 Points Ahead

June 11, 2016, 3:12 PM UTC
Pound Seen Tumbling Whether U.K. Stays In EU Or Seeks 'Brexit'
Photograph by Bloomberg via Getty Images

Betting odds on a British vote to exit the European Union shortened on Saturday after an opinion poll put the “Leave” camp 10 points ahead of “Remain,” hitting the value of the pound.

Sterling weakened by as much as 1.2% against the dollar immediately after the poll, by ORB for the Independent newspaper, was published on Friday evening.

The pound fell from $1.4343 to $1.4177, but later recovered about half of the loss.

Britons will vote on June 23 referendum on whether to leave the world’s largest free trading area, a decision with far-reaching implications for politics, the economy, trade, defense and migration in Britain and the rest of the EU.

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The ORB poll put support for “Leave” on 55%, against 45% for “Remain.”

Bookmaker Betfair cut the odds of a vote to stay, giving a probability of 70%, down from 78% earlier this week.

Financial markets have been paying close attention to bookmakers’ odds, especially as opinion polls failed to predict last year’s outright election victory for Prime Minister David Cameron’s Conservatives.

“The ‘Remain’ camp has two weeks to convince those thinking about voting for Brexit that the risk is real,” said ORB pollster Johnny Heald.

However, he did say that recent referendums in Scotland, Ireland and Canada showed that opinion polls had a tendency to underestimate support for the status quo.

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Friday’s survey gave the “Brexit” camp their biggest lead since the poll series started a year ago, the Independent said. But the official Vote Leave campaign reacted cautiously, tweeting: “We don’t believe the ORB online poll, our data suggests it’s closer to 50-50.”

Bookmaker Ladbrokes said the ORB poll had caused it to shorten its odds on Brexit to 9/4 from 11/4 previously, implying a rise in the likelihood of a “Leave” vote to 30% from 27%.

“We thought the Brexit rally was finished, but the ‘Leave’ odds have tumbled again on the back of the eye-catching 10-point poll,” said a Ladbrokes spokesman.

Asked about the contradiction between the betting odds and the poll, he said the former reflected the weight of money in the market.

“Since we first started taking bets on this, 80% of the money we’ve taken has been for ‘Remain’. This is like any other market, the money moves the market,” the spokesman said.

“Polling is a snapshot of voter intention at any given point; a betting market is a predictions market.”

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The mixed picture has heightened market jitters about the outcome, with sterling repeatedly reacting to poll results.

Nigel Farage, leader of the pro-Brexit UK Independence Party, told Italy’s Corriere della Sera newspaper in an interview that Cameron, who wants Britain to stay in the EU, should resign even if ‘Remain’ won by a narrow margin.

Separately on Saturday, a group of Britain’s most eminent scientists endorsed the “Remain” campaign for the UK to remain in the EU, saying that leaving could damage research.

On Friday, however, billionaire entrepreneur James Dyson came out in favor of Brexit.