Market: close vote causes rush to swap cash
Holidaymakers rush to exchange money
One money bureau has reported a 70% surge in business compared to this time last year as analysts predict sterling to fall by as much as 20% if the Leave campaign wins.
No.1 Currency recorded its busiest day of the year yesterday with customers queuing outside its network of 102 high street stores.
The surge in demand for foreign currency also saw it record its busiest ever day for online sales, and a 300% increase in orders for home delivery of currency.
Simon Phillips, retail director at the firm said: “Demand has rocketed for all foreign currencies, but euros and dollars are proving especially popular.
“Our network of high street stores came close to running out of the most popular currencies on Wednesday, and as high demand continues today we’ve dramatically increased stock levels to cope with the surge in demand during the final hours before the result is announced.
“What began as brisk demand from holidaymakers keen to bag a good rate on their currency is increasingly resembling panic buying as people rush to buy now before the result is known.”
Foreign exchange has seen the greatest volatility over the past 24 hours and sterling surged against the dollar last night to its highest level since 28 December on indications that the Remain camp is in the lead.
A poll by Ipsos MORI today suggested 52% in favour of remaining in the EU while 48% would vote to leave.
Sterling rose against the dollar after the poll was published, reaching a six-month high and trading up 1.2% early today at around $1.48. But this afternoon it lost around 200 points.
Andy Scott, economist at HiFX, said: “After clocking up an impressive rally of nearly 2% on Thursday, hitting a 6-month high against the US dollar, sterling reversed course sharply this afternoon.
“GBP/USD fell 200 points from its high to 1.4750 as traders took profits on the earlier rally, positioning themselves cautiously ahead of a still uncertain outcome. So far this year we’ve seen the daily percentage change (from the highest to the lowest price) increase by 40% compared with the last six months of 2015. This can be linked to Brexit with this week’s movement the biggest since October 2009.
“Leading into this evening, we expect liquidity to fall further as banks rein in FX activity, especially in GBP transactions with no one wanting to get their fingers burnt by the expected big moves that are possible in either direction. We expect some initial reaction in sterling to the exit polls after 10pm, with the main excitement likely to be in the early hours of Friday morning once we starting getting the results in.”
The FTSE 100 dipped in afternoon trade to 6,261 but rallied to close up 76.91 points (+1.23%) at 6,338.1 – its highest for two months – after hitting an intra-day high of 6,380.58. All the FTSE indices were higher. The FTSE 250 ended the session up 1.7%.