Pound climbs with euro, krone after polls show 'Remain' leading

[LONDON] The pound gained, spurring a rally in higher-yielding peers, as the first poll taken after the murder of pro-European Union lawmaker Jo Cox showed the campaign for the UK to remain in the trading was gaining momentum.

Currency volatility has retreated to a one-week low after a poll from Survation taken June 17-18 for the Mail on Sunday newspaper showed "Remain" backed by 45 per cent and "Leave" by 42 per cent, reversing positions from Survation's previous survey.

The pound gained at the end of last week after campaigning for this Thursday's referendum was suspended following Ms Cox's death. She was attacked June 16.

"Weekend polls suggested the tragic death of Jo Cox may be shifting some support back to "Remain" - that has helped risk sentiment a bit," said Robert Rennie, the global head of currency and commodity strategy at Westpac Banking Corp. in Sydney.

"The polls are also driving the move away from safe- haven currencies."

Sterling surged 1.4 per cent to US$1.4546 as of 9:22 am in Tokyo, after advancing 1.1 per cent last Friday to complete its first weekly advance this month. Gains much beyond US$1.45 will only be seen if "Remain" wins the vote, Mr Rennie said.

The euro strengthened 0.7 per cent to US$1.1351. The yen retreated 0.5 per cent to 104.70 per US dollar. The Aussie dollar climbed 0.6 per cent to 74.27 US cents, while the Norwegian and Swedish currencies both gained 0.9 per cent.

A JPMorgan Chase & Co index of Group-of-Seven currency volatility has declined to 11.5 per cent, after closing at 12.79 per cent on June 14, a level unseen since December 2011.

The prospect of the UK exiting the world's largest trading bloc has fueled investor nervousness across the globe. The Federal Reserve said on June 15 the Brexit referendum was a factor in its decision to keep interest rates on hold.

Bank of England officials led by Governor Mark Carney left policy unchanged last week and said a vote to leave may damage the country's economy and trigger further weakness in the currency.

A global bond rally sent yields on government bonds to record lows from the UK to Germany, Japan and Australia. The yen surged 2.7 per cent last week and touched 103.55, the strongest in almost two years, as financial turmoil spurred demand for the currency as a haven.

Prime Minister David Cameron entered the final week of campaigning ahead of the referendum with an accusation that his opponents are trying to deceive people into voting to leave.

After two days when campaigning was suspended following Ms Cox's murder, Sunday saw both sides return to the fray.

The prime minister, taking audience questions on a BBC television special, criticised his opponents both over the tone of some of their anti-immigration messages and specific claims they've made.

The probability of a vote to leave declined to about 30 per cent on Sunday from almost 40 per cent on Wednesday, according to bookmaker odds processed by the Oddschecker website.

A survey by YouGov Plc for the Sunday Times, a third of which was conducted before the attack, showed "Remain" on 44 per cent and "Leave" on 43 per cent.

The pollster said it doubted the rise in backing for the EU was tied to Ms Cox's killing and suggested it may relate more to concerns about what Brexit would mean for the economy.

"The markets have always been more comfortable with the UK remaining in the European Union, hence the boost to risk sentiment now that the 'Remain' camp's campaign appears to be back on track," Kathleen Brooks, London-based research director at Gain Capital Holdings Inc, wrote in a note.

BLOOMBERG