Small ‘Remain’ lead in UK poll helps sterling steady

LONDON: Sterling gained ground for the first time in more than a week on Wednesday, rising one-third of a percent against the euro and dollar after the latest poll gave the Remain camp a marginal lead ahead of next week's referendum on EU membership.

Traders said the wait for a statement from the U.S. Federal Reserve after UK markets close was also calming the market.

Opinion surveys in the past week showing a swing towards a vote for Britain to leave the 28-country EU have hit sterling, now down 4 percent in trade-weighted terms since the end of May, and the market's tone remains shaky.

But the ComRes poll for Britain's best-selling Sun newspaper, which came out in favour of a Brexit on Tuesday, gave the Remain camp a 1 point lead going into the final week of campaigning. Betting odds showed a 62 percent chance of a vote to stay in the European Union, up from this week's lows of 55 percent.

"The pound is in recovery mode ahead of this evening's Fed meeting," said Kathleen Brooks, research director at City Index in London. "This is likely just a pause after another bruising day for risk assets on Tuesday."

British jobs numbers for May are due at 0830 GMT.

Worries over the immediate economic fallout and the financing of Britain's huge current account deficit in the aftermath of the referendum have raised bets on a weaker pound to a net $6 billion -- the most in more than three years.

Traders say some of that is likely to be taken off the table next week as speculative investors hedge against what are expected to be huge one-off moves in the pound either way after the vote.

"Sterling selling may have at most till the end of the week to run," said Richard Benson, co-head of portfolio management at currency fund Millennium in London.

"No-one has the stop losses to deal with a 5 or 10 percent gap and the options market is effectively closed, so any sensible trader will have to reduce to hedge the risk in their position."

The pound rose 0.35 percent to $1.4169 and 79.15 pence per euro in early trade.