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| Sterling volatility rises amid fears over EU vote | |
| (35 minutes later) | |
| Sterling volatility has jumped to the highest level in more than seven years after a Guardian poll showed the Brexit camp is in the lead, as the EU referendum campaign picks up pace. | Sterling volatility has jumped to the highest level in more than seven years after a Guardian poll showed the Brexit camp is in the lead, as the EU referendum campaign picks up pace. |
| One-month implied sterling volatility – the price of insuring against swings in the pound against the dollar – rose to 19.6% from 17% a day earlier, as Brexit fears mounted ahead of the 23 June referendum. | One-month implied sterling volatility – the price of insuring against swings in the pound against the dollar – rose to 19.6% from 17% a day earlier, as Brexit fears mounted ahead of the 23 June referendum. |
| It was the highest level since the depths of the financial crisis in February 2009, a month before the Bank of England made the unprecedented move of cutting interest rates to an all-time low of 0.5%. | It was the highest level since the depths of the financial crisis in February 2009, a month before the Bank of England made the unprecedented move of cutting interest rates to an all-time low of 0.5%. |
| Sterling volatility is considered a sign of market anxiety, and Wednesday’s surge followed a Guardian poll that showed voters are 52%-48% split in favour of leaving the European Union. | Sterling volatility is considered a sign of market anxiety, and Wednesday’s surge followed a Guardian poll that showed voters are 52%-48% split in favour of leaving the European Union. |
| The pound tumbled to a two-week low against the dollar at $1.4439. | |
| Sakis Paraskevov, an analyst at IronFX, told Reuters: “Sterling remains sensitive to any new polls that place a leave vote ahead by a considerable margin,. | Sakis Paraskevov, an analyst at IronFX, told Reuters: “Sterling remains sensitive to any new polls that place a leave vote ahead by a considerable margin,. |
| “We expect the volatility in cable (sterling/dollar) to continue rising in the coming days, given that polls just a few days before the vote may have a bigger market impact than they did previously.” | “We expect the volatility in cable (sterling/dollar) to continue rising in the coming days, given that polls just a few days before the vote may have a bigger market impact than they did previously.” |
| Most economists believe that a vote to leave the EU would trigger a sharp fall in the pound, while a vote to remain would drive it higher. | Most economists believe that a vote to leave the EU would trigger a sharp fall in the pound, while a vote to remain would drive it higher. |
| Mark Carney, the governor of the Bank of England, warned last month that the British economy could slide back into recession if the country votes for a future outside the EU. | Mark Carney, the governor of the Bank of England, warned last month that the British economy could slide back into recession if the country votes for a future outside the EU. |