Bearish British Pound Bets Hit Record High As Poll Shows Brexit Most Probable

The campaign for Britain to leave the European Union has taken a 2 percentage point lead, according to an ICM poll, to 43%, up 2 percentage points from a similar poll a week ago and the highest proportion in favour of a British exit since ICM started its referendum tracker in May 2015. Bearish bets on GBP have soared to record highs as a split within the governing Tory party and the atrocities in Brussels have sent bookies odds to their highest yet.

As Reuters reports, support for Britain to leave the EU rose to 43 percent, up 2 percentage points from a similar poll a week ago and the highest proportion in favour of a British exit since ICM started its referendum tracker in May 2015.

Three months before a June 23 referendum, the poll of 2,000 people carried out March 18-20 showed the "In" campaign on 41 percent, down from 43 percent a week ago.

 

Cameron faces one of the deepest crises of his decade-long leadership of the Conservatives after senior cabinet minister Iain Duncan Smith, who opposes EU membership, resigned last week over plans to cut spending on welfare.

 

Divisions over EU membership - an issue that helped sink the Conservative premierships of Margaret Thatcher and John Major - have amplified such disputes within the party.

 

"The Tories are overtly split and that is never a good look," Martin Boon, director at ICM, said.

 

"It’s possible that the split and the budget is creating EU dissatisfaction by proxy but equally it could be the public moving toward a more pro-Brexit position or just normal sampling variation in the polls. Only time will tell," he said.

The cost of hedging against sharp swings in sterling surged to its highest ever on Wednesday as investors stepped up to protect themselves from the uncertainty of Britain's upcoming vote on whether to stay in the European Union.

 

And, as Reuters adds, the odds of Britain voting to leave the European Union in a June referendum narrowed on Tuesday as attacks in Brussels that killed at least 34 people were seen boosting the 'Out' campaign.

Bookmaker Paddy Power narrowed its odds on a Brexit to 7/4, or 36 percent, from 2/1, or 33 percent, on Monday. Betting website Betfair also shortened its odds to 36 percent, while four major bookmakers, including Bet 365 and Sky Bet, narrowed their odds to 6/4, or 40 percent, following the attacks.

 

PredictIt, a political prediction website run by Victoria University in Wellington, New Zealand, said the chances of an 'Out' had increased to 45 percent.

 

"What we've seen today in Brussels ... may sway people (toward voting to leave the EU), so I think that's why the bookies have shortened the odds," said Chris Hawkes, a currency trader at ETX Capital in London.

 

"The average man on the street doesn't really understand the ins and outs of a Brexit, and border control seems to be one of the primary concerns, so when we see attacks that we've seen today this is going to make people more staunch on their standpoint," he added.