GBP/USD Surges on Diminishing Chance of a Brexit

The GBP/USD rallied on Monday after fresh opinion polls showed a major swing towards the UK remaining a member of the European Union, boosting risk sentiment. The implied probability of a “Remain” vote in Thursday’s referendum rose to 72 percent after falling as low as 60 percent last Thursday, according to odds from gambling website Betfair.

Investors reacted after three of six opinion polls published over the weekend showed a shift towards keeping Britain in the EU, with some citing the killing last week of pro-EU lawmaker Jo Cox as a factor.

Prior to the latest polls, data from the Commodity Futures Trading Commission released on Friday showed speculators reduced their net short positions against Sterling in the latest week, from a three-year high.

The GBP/USD rose 2 percent to 1.4645. It earlier reached its highest in three weeks, as it extended a recovery from Thursday’s more than two-month trough of 1.4013.

Increased appetite for risk drove the safe-haven Japanese Yen sharply lower while lending support to the Euro. The weakness in the Yen offered some relief for Japanese policymakers concerned about the currency’s strength. The EUR/USD rallied to 1.1382 before pulling back to 1.1343, up 0.0072 or 0.64%.

August Comex Gold futures fell on Monday after polls showed the campaign for Britain to remain in the European Union regaining some momentum, sharpening appetite for assets seen as higher risk and sparking a sharp rally in stocks. The August futures contract was down nearly 1.0% or $10.80 to $1284.00.

August Crude Oil futures rallied on Monday, lifted by a wave of investor confidence and a weaker U.S. Dollar after polls showed a diminishing chance that Britain may vote to leave the European Union later this week.

August Brent crude futures were up 85 cents, or 1.8 percent, at $50.02 a barrel, having reached an intraday high of $50.40. U.S. West Texas Intermediate crude form July delivery was up 83 cents, or 1.7 percent, at $48.21 a barrel. It reached a high of $49.21 earlier in the session.

Oil prices also continued to recover after last week’s sell-off despite new data showing U.S. energy firms adding oil rigs for a third week in a row, suggesting higher production to come.

The Dow Jones Industrial Average traded about 250 points higher while the S&P 500 Index surged more than 1 percent with financials leading the index higher. The NASDAQ composite also advanced more than 1 percent.