Pound, Euro Rise Ahead of Brexit Vote

Recent polls suggest stronger support for the “Remain” camp easing investors’ fears

The Wall Street Journal

By CHELSEY DULANEY
Updated June 22, 2016 4:49 p.m. ET


The pound and euro rose against the dollar on Wednesday, as markets were relatively calm a day ahead of the U.K. vote on continued European Union membership.

The pound was recently quoted up 0.3% at $1.4691. The euro recently rose 0.5% to $1.1297.

The referendum over the so-called Brexit is scheduled for Thursday. The U.K. Treasury has estimated a British departure from the EU would drag down the pound by at least 12%. Analysts expect the euro also would be negatively impacted in the event of a Brexit, which could raise questions about the future of the 28-member bloc.



Recent polls have indicated stronger support for the “Remain” camp in the referendum, easing investor fears and driving the pound to its highest level since January. Betting markets, which many investors take more seriously than opinion polls, are showing an 80% chance of Britain remaining in the EU, according to analysts at Brown Brothers Harriman.

The pound’s recent rally “reflects the market’s more certain view of the likely outcome of the referendum,” analysts at Scotiabank wrote in a research note. “With the last-minute polling still reflecting a tight race, however, markets are likely to remain somewhat guarded in trading today and through Thursday.”

Meanwhile, U.S. Federal Reserve Chairwoman Janet Yellen gave her second day of testimony to Congress on Wednesday.

Ms. Yellen largely reiterated her comments from a day earlier, when she said that economic output in the U.S. has picked up in the second quarter and that low interest rates and job gains would likely support consumer spending. But Ms. Yellen’s longer term outlook was restrained, as she addressed various domestic and foreign issues that could hinder growth, such as low productivity in the U.S. and the risks of a slowdown in China’s economy.

The WSJ Dollar Index, which measures the U.S. currency against a basket of 16 others, was recently down 0.4% to 85.48.

Write to Chelsey Dulaney at Chelsey.Dulaney@wsj.com