Sterling hits 2016 high against dollar

The pound hit its highest level of the year against the US dollar, ahead of EU referendum voting day.

As voters headed to polling stations up and down the country, currency traders overnight sent the pound higher, gaining 0.9% to reach $1.4844. In early trading the pound retreated slightly. At 9.30am it was trading at $1.4779, up 0.46%.

The FTSE 100, which has enjoyed a good run over the past five days, rising 6%, has started the morning session in positive territory.

At 9.30am the index had gained 0.76%, to trade just above 6,300. The pound has also rallied. In Monday's session (20 June) sterling posted its best one-day performance since March 2009, rising 2.34%.

The 'Remain' party may not last

While the various opinion polls in recent weeks have indicated that the referendum is too close to call, the movements over the past couple of days suggest financial markets have already cast their vote and are expecting a victory for the 'Remain' campaign.

However, Lee Wild, head of equity strategy at Interactive Investor, cautions that even if this scenario plays out there may only be a brief rally because there are other concerns for investors to worry about.

"The implications of the EU referendum for financial markets must not be underestimated. Vote 'Remain' and UK shares will add to this week's gains. Back 'Leave' and there'll be carnage on Friday morning," says Wild.

"Opinion polls tell us it's too close to call, but the hot money is most definitely on the status quo and another rally to end the week.

"However, even if remain wins, the party may not last. It's only a matter of time before investors remember lacklustre global economic growth, the slowdown in China, and the threat of Donald Trump making it to the White House."

This article was originally published by our sister magazineMoney Observer here.

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