Markets, bettors put money on UK remaining in EU

Published 9:50 am Thursday, June 23, 2016

LONDON — Financial markets and bettors put their money on Britain’s voting to remain a part of the European Union on Thursday in a historic referendum that threatens to undermine the experiment in continental unity launched in the aftermath of World War II.

More than 46 million people were registered to vote in the referendum, which asks: “Should the United Kingdom remain a member of the European Union or leave the European Union?” The heated campaign saw the nation take stock of its place in the modern world and question the direction it wanted to take in the future.

“This is, I’d say, the most important day in the past 20 years, at least for the U.K., and the economic consequences of a vote out are huge,” said investment banker Hasan Naqvi outside a London polling station. He is voting to stay.

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“Leave” campaigners claim that only a British exit can restore power to Parliament and control immigration. The “remain” campaign led by Prime Minister David Cameron argues that Britain is safer and richer inside the 28-nation EU.

Financial markets have been volatile ahead of the vote, with opinion polls suggesting a tight race, but the pound surged Thursday amid market optimism that uncertainty over the vote would end with a vote to stay. Currency traders expect mayhem in the event of a British exit, or Brexit.

The pound, which experts say would face a sharp drop in case of an EU exit, rose to its highest level this year, to around $1.4900. Britain’s benchmark stock index was up 1.2 percent, adding to big gains so far this week. Other European stock markets were up almost 2 percent.

The bookies also clearly saw momentum to “remain.” The betting market Betfair said the probability that the country will stay stands at 86 percent, with a British exit, or Brexit, given just a 14 percent chance. William Hill revised the chances of a “leave” vote down from 25 percent to just under 17 percent.

“Markets seem to be taking a very big bet that the bookmakers are right that there is a minimal chance of a Brexit,” said Michael Ingram, Market Strategist for BGC Brokers, L.P.

Also buoying the markets was an opinion poll conducted by the Ipsos MORI firm for the Evening Standard newspaper which suggested the “remain” camp winning by a narrow margin.

“It’s perfectly possible that England will vote to leave but London as the capital city, and Scotland and Northern Ireland will all vote to remain and outweigh ultimately the view of the English as a whole,” said Ben Page, the chief executive officer of the market research firm.

Turnout is considered critical in the vote, as polling suggested there were a number of undecided voters. A large turnout will favor the “remain” campaign as those who waver at the end tend to go for the status quo. Those favoring “leave” also tend to be more committed.

“It’s all about turnout and those soft ‘remainers’ staying at home,” U.K. Independence Party leader Nigel Farage said outside his home after collecting the newspapers.

“I do think we are in with a very strong chance, I do genuinely,” he said.

It was raining heavily in some parts of the country, which could reduce turnout. There were anecdotal reports of voters being unable to get to the polls.