Arrangement of various world
currencies including Chinese Yuan, US Dollar, Euro, British Pound,
pictured January 25, 2011 REUTERS/Kacper Pempel/Illustration/File Photo
Two opinion polls on Monday showed that the "Remain" camp has recovered some ground in Britain's European Union referendum debate.
The implied probability of a "Remain" vote in Thursday's referendum rose to around 78 percent after falling as low as 60 percent last Thursday, according to odds from gaming website Betfair. For the latest Reuters news on the referendum including full multimedia coverage, click
The British pound (GBP=D4) rose 0.2 percent in Asian trade to $1.4707, and touched a peak of $1.4728 at one point, its highest level since May 26.
On Monday, sterling climbed 2.1 percent against the dollar, its biggest one-day gain since late 2008.
"The
market is reacting to every twist in opinion polls but trading is
becoming choppy because people are avoiding taking big positions ahead
of the poll. Our options desk was fairly quiet yesterday," said Kyosuke
Suzuki, director of forex in Japan for Societe Generale.
"Polls seem to suggest support for 'Remain' is rising, but the truth is we won't now until we see the results," he said.
This
is the third time the currency pair has tested the $1.47-48 band since
May and a clear break of those levels could spark a wave of
short-covering in the pound.
But traders also said any break may have to wait until the markets see the results of Thursday's referendum.
"Until then, there could be more ups and downs," said Masashi Murata, currency strategist for Brown Brothers Harriman in Tokyo.
The
latest swing in opinion polls in favour of the "Remain" camp also adds
to the risk of an especially sharp market reaction if the actual vote
result, expected to reach markets on Friday morning in Asia, were to go
the other way, Murata added.
"As
a risk, we have to be on guard on the Tokyo morning of June 24... It
could lead to a pretty serious situation if the result turns out to be
'Leave'," he said.
The
implied volatility on pound options has fallen notably as investors see
a diminishing chance of the "Leave" camp winning. The three-month
volatility last stood at 13.4 percent (GBP3MO=), compared with a high of
18.5 percent last week.
The
euro edged up 0.2 percent against sterling to 77.08 pence (EURGBP=D4).
Still, that wasn't far from Monday's near three-week low of 76.925 pence
(EURGBP=D4).
Against the dollar, the euro (EUR=) edged up 0.2 percent to $1.1330 (EUR=).
The
dollar index (=USD) (.DXY) stood at 93.556, holding above a one-month
low of 93.425 hit earlier this month, as the market awaited U.S. Federal
Reserve Chair Janet Yellen's testimony before the Senate Banking
Committee at 10 a.m. Washington time (1400 GMT).
The dollar edged up 0.4 percent to 104.38 yen (JPY=).
Earlier on Tuesday, the dollar slipped to 103.58 yen, bringing the yen close to its 22-month high of 103.555 set last Thursday.
After
the yen's latest rise, Japanese Finance Minister Taro Aso said on
Tuesday that Japan would respond to rapid currency moves in line with
G7/G20 agreements, although the country would not intervene in the
market so "easily".
The dollar briefly fell from around 104.10 yen to roughly 103.85 yen after Aso's comments, but later pushed higher.
(Editing by Sam Holmes and Richard Borsuk)
Culled from Reuters
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