LONDON: Sterling hit two-week highs on Monday and was on track for its biggest one-day rise in almost seven years against the dollar, as worries that Britain will vote to leave the European Union at a referendum on Thursday faded.
Campaigning for the vote resumed on Sunday after a three-day hiatus prompted by the killing of a pro-EU lawmaker, with three opinion polls over the weekend showing the 'Remain' camp recovering some momentum, although the overall picture remained one of an evenly split electorate.
As bookmakers and online betting exchanges shifted their odds to reflect around a 27 percent chance of a Brexit on Monday, down from around 40 percent on Thursday, the cost of hedging against sterling volatility also dropped sharply.
One-week sterling/dollar implied volatility, derived from an option that covers the ballot and the results, fell to around 38 percent, down from a record high of around 50 percent on Friday.
One-month sterling/dollar implied volatility also fell to around 21 percent, down from almost 29 percent last week.
Sterling was up 1.7 percent against the dollar at $1.4609 , putting it on track for its biggest one-day rise since October 2009. It earlier hit a two-week high of $1.4625. The pound also hit a two-week high of 77.67 pence per euro , up 1.2 percent on the day.
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