[NEW YORK] The pound rallied Friday as investors swung their bets to Britain voting to remain in the European Union next week.
Long-running fears of a pro-Brexit vote on June 23 had been hammering the pound, and they were heightened in recent weeks as the "Leave" campaign pulled ahead in the polls.
On Friday, the pound gained in part due to the three-day suspension of campaigning after the murder of pro-EU British lawmaker Jo Cox on Thursday.
"The shocking news was seen, at least on the margin, as hurting public sentiment toward the Brexit move," said Omer Esiner of Commonwealth Foreign Exchange.
The pound surged about one per cent against the US dollar to US$1.4348. It was up 0.5 per cent against the euro at 78.62 pence.
The European single currency gained against both the US dollar and the yen.
Besides Thursday's Brexit vote, traders will be turning their attention next week to Federal Reserve Chair Janet Yellen's testimony in on the US economic outlook on Tuesday and Wednesday in Congress.
Investors are expected to closely follow her remarks for clues on future rate hikes, after the Federal Open Market Committee kept rates unchanged on Wednesday in part due to concerns about the looming Brexit referendum.
"We expect Yellen to reiterate the cautious message of last week's post-FOMC meeting press conference," Deutsche Bank analysts said in a client note.
"However, we cannot discount the risk that she will deliver a slightly more upbeat message in case she is dissatisfied with the financial markets' interpretation of the path of monetary policy."
Markets have been decidedly more bearish than the Fed on the likely path of rate hikes, pricing in lower rates for longer on signs of weakness in the US economy and slowing global growth.