LONDON: The pound faced renewed pressure Monday after polls put the British referendum vote back on a knife-edge, but the London stock market rallied to outperform its eurozone rivals.
Britain's currency dropped to around three-week lows against the euro and dollar, before rebounding.
The euro hit 79.05 pence in Asian trading hours -- the European single currency's highest level against sterling since mid-May.
And the pound slid to $1.4353 -- a three-week low point.
Sterling clawed back some of the losses however heading into the European afternoon session.
"The polls are having a significant impact on the pound," said Craig Erlam, senior market analyst at Oanda trading group.
Traders on Monday were reacting to a series of polls, one of which showed Brexit backers moving into a lead in the polls for the first time in weeks, raising pressure on Prime Minister David Cameron ahead of Britain's June 23 EU referendum.
Financial markets have proved volatile ahead of the vote that could see Britain becoming the first country to drop out of the EU and have proved particularly so as the campaign has heated up.
Elsewhere on currency markets Monday, the dollar clawed back some of its hefty losses after last week's soft US jobs report reduced the chances of an imminent interest rate rise from the Federal Reserve.
A strong yen meanwhile continued to hit Japanese exporters -- resulting in Tokyo's Nikkei stocks index ending the day down.
In Europe, London's benchmark FTSE 100 index outpaced rival Frankfurt and Paris markets, jumping by more than 1.0 percent in morning deals.
"The FTSE 100 rose by as much as 50 points, ahead of other European stock indices," said CMC Markets analyst Jasper Lawler.
"Mining stocks are the main differential between the UK and mainland indices. Commodity stocks are continuing to benefit from Friday's sharp drop in the US dollar and the resulting rise in metals prices."
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