LONDON: Sterling gained more than 1 percent to a 2016 high against the dollar in morning trade in London as bookmakers' odds shifted in favour of a vote for remaining in the European Union in Thursday's referendum.

Betting exchange Betfair showed odds of around 15 percent for a vote to leave, down from more than 40 percent a week ago before the killing of British lawmaker Jo Cox.

The pound gained 1.2 percent on the day to as high as $1.4889 before pulling back to $1.4855.

One-month implied volatility of sterling, shown in prices of currency options, fell to around 19 percent from 25 percent on Wednesday, also an indicator of a drop in the chances of extreme moves in the pound over the next 24 hours.

Copyright Reuters, 2016