Pound boosted after polls show “remain” gaining ground

Improved sentiment following weekend polls on the UK’s European Union membership referendum and a weaker yen were pushing up shares around Asia on Monday.

Ahead of Thursday’s EU membership vote, polls showed the lead of the Leave campaign had been trimmed. That was enough to power the British pound up by as much as 1.8 per cent to $1.4614, making it best-performing major global currency this morning.

In contrast, the yen was the worst-performing currency, 0.4 per cent weaker at ¥‎104.62 per dollar and likely spelling the end of a six-session winning streak.

Brexit concerns are likely to dominate investors’ concerns this week. Previous polls showed the Leave campaign gaining an edge over Remain, undermining the pound, pushing yields on UK gilts to record lows and spurring volatility across financial markets. But polls over the weekend showed the Leave camp’s lead had been eroded, although the contest still remains very close.

Oil prices were buoyed by a weaker US dollar. Brent crude, the international benchmark, was up 0.7 per cent to $49.52 a barrel on Monday, having gained 4.2 per cent on Friday, while West Texas Intermediate, the US marker, was 0.9 per cent higher today at $48.42 after a 3.8 per cent advance in the previous session.

The dollar index, a measure of the US currency versus a basket of global peers, was down 0.6 per cent at 93.594 today and lining up for a four-day losing streak. The euro was 0.8 per cent firmer at $1.1365.

Markets are also waiting for the semi-annual testimony from the Federal Reserve chair, Janet Yellen, on Tuesday. This comes a week after the central bank decided to leave interest rates on hold as it noted the softening of the US labour market and potential hazards to the outlook from overseas, such as an adverse outcome from the Brexit vote.

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