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Pound surges against the dollar as Remain campaign gains ground Pound surges against the dollar, global stocks rise as Brexit fears subside
(35 minutes later)
Sterling has risen sharply against the dollar as opinion polls begin to point towards Britain remaining in the European Union. The pound has surged against the dollar after opinion polls showed that support for the UK staying in the EU was gaining ground ahead of the referendum.
The pound rose 1.49 per cent against the greenback to 1.45 US dollars on Monday morning, bouncing back from last week's losses. Sterling approached its biggest one-day rally since 2009 in midday trading, up 1.24 per cent at $1.46 to the pound.
Investors are feeling more bullish after the first opinion polls since the murder of Labour MP Jo Cox suggest the Remain campaign is mounting a fightback following a two-day suspension in campaigning. The FTSE 100 also made gains, jumping 200 points ahead at 6223, meaning that about £50 billion has been added to the value of the index, making up for some of the losses seen since the end of May.
Kathleen Brooks, research director at Gain Capital, said: “The pound has gapped higher at the start of this week's trading session after the latest EU referendum opinion poll suggested a loss of support for the Leave camp. "The pound has moved from buying one dollar forty cents on the lows of Thursday to buying $1.46 now," said Louise Cooper, a City analyst.
”The pause in the campaign seems to have lent crucial support to team Remain, with only four days to go until the vote. The markets have always been more comfortable with the UK remaining in the European Union.“ "As one FX strategist said to me this morning: 'I’d normally expect to see that size of move in a month'."
Volatility in the pound has already surged to levels not seen since the financial crisis and sterling is set for a rocky ride this week. Polls have shifted over the weekend, with the Remain campaign edging ahead just days before Britons vote.
Bookmaker Betfair also said the probability of a remain vote has risen to 72 per cent, up from Friday's 65 per cent. A Sunday Times and YouGov poll put Remain on 44 per cent, just ahead of Leave, on 43 per cent. A Mail on Sunday poll& had Remain ahead by 45 per cent to 42 per cent.
 
A national poll by BMG for the Herald put Remain even further ahead, on 53.3 per cent to Leave's 46.7 per cent.
Meanwhile the FT's poll of pollsput both campaigns neck and neck at 44 per cent.
RBC Capital Markets said gains made by the pound were a reflection of investors taking comfort that the UK was more likely to vote to stay.
"A higher chance of the UK voting to stay is a relief for markets (equities and the pound sterling) that had been preparing themselves for a Leave vote and the uncertainty it could inflict from both a financial, economic and political standpoint," said Mike van Dulken, analyst at Accendo Markets.
Banks and builders led the way in the FTSE 100, with RBS shares up 7.38 per cent at 238.50 points and Lloyds up 6.63 per cent at 69.44.
Meanwhile Taylor Wimpey was up 7 per cent at 188.43.
But Mrs Cooper, City analyst, cautioned against solely crediting the EU referendum for gains in markets.
"This move is driven by computer trading, with computer algorhythms driving the move higher. As various technical levels are breached, more buy orders come in and momentum gathers. The 'real players' in the market – corporates and pension funds – are mostly on the side lines," she said.