British pound rallies on bets Britain votes to stay in EU

[TOKYO] The British pound rallied against the dollar and yen in Asia on Wednesday as bookmakers bet heavily that Britain will vote to stay in the European Union, despite opinion polls pointing to a neck-and-neck race.

The uptick comes after European Commission President Jean-Claude Juncker and US Federal Reserve boss Janet Yellen on Tuesday warned that a British exit could hammer world markets.

Mr Juncker said leaving would be "an act of self-harm" that would endanger everything Europeans had worked together to achieve.

Later Ms Yellen, speaking to US lawmakers, warned of the dangers of an out vote, saying it would likely send shockwaves through already fragile global markets. European Central Bank chief Mario Draghi said it was preparing for "all possible contingencies".

The pound advanced to US$1.4687 in Asia Wednesday, from US$1.4628 in New York, where it hit a five-month high of US$1.4783.

Sterling has climbed nearly two per cent against its major peers in the past week on signs of dwindling support for an exit, following the murder of pro-EU British lawmaker Jo Cox, according to Bloomberg News.

It also bounced to 153.55 yen, up from Tuesday's low of 153.32 yen late Tuesday, while it was at 1.3038 euros against 1.3044 euros.

After Cox's murder on Thursday "a fair bit of repricing has occurred in the pound on the back of the shift in polls that were earlier clearly favouring 'Leave'", National Australia Bank Rodrigo Catril said in a commentary.

"The pound will definitely be volatile ahead of the vote." There were few concrete trading cues ahead of the historic vote, added Stephen Innes, senior trader at OANDA Asia Pacific.

"We are less than 48 hours away from Judgement Day," he said.

"Other than kicking the can from poll to poll, there is little on offer for traders to sink their teeth into."

In other trading, the dollar slipped to 104.55 yen from 104.80 yen, while the euro was at US$1.1265 and 117.78 yen against US$1.1259 and 117.99 yen after comments from Ms Yellen in a deposition to Congress suggested US interest rates would not likely rise in any time soon.

AFP