Brexit Polls and Markets Disagree in Campaign’s Final Hours

London (Jun 22) Britain entered the final day of campaigning before its referendum on European Union membership with opinion polls and financial markets at odds over the outcome.

Investors are piling money into bets on a victory for the “Remain” campaign, led by Prime Minister David Cameron. The pound has surged to a five-month high and European stocks just posted their biggest three-day gain in almost a year, with the U.K.’s benchmark index erasing its monthly decline. Bookmakers have shortened their odds on a vote to stay.

Polls, meanwhile, say the race is too close to call after a swing toward the “Leave” campaign came to an apparent halt last week following the murder of Labour Party lawmaker Jo Cox, a supporter of staying in the EU.

“Rising anticipation that ‘Remain’ will win the vote is driving the market,” said John Plassard, a senior equity-sales trader at Mirabaud Securities in Geneva. “Even if polls are close, people are paying more attention to the bookmakers because that was a much better predictor in past referendums.”

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The British currency is already trading at levels economists forecast it would reach after a decision to stay in the EU. Sterling was up 0.2 percent at $1.4679 as of noon in London. The median estimate in a Bloomberg poll of economists earlier this month was for it to trade in a range of $1.45 to $1.50 the day after a “Remain” victory.

European equities, which tumbled last week, jumped 5.8 percent in the past three days, the most since August. Britain’s FTSE 100 Index has rebounded 5.4 percent from its low and has erased its monthly loss. And an index of betting flows compiled by Oddschecker shows the chance of Brexit has fallen to about 25 percent from 43 percent since June 14.

Less than 24 hours before voting booths open Thursday, both sides of the campaign are still assuming there’s all to play for, and making emotional appeals to the electorate. A record number of Britons, 46.5 million, have registered to vote, according to the Electoral Commission.

High Stakes

The domestic stakes are high. Scotland’s Parliament should have the right to propose another referendum on independence if it "faces the prospect of being taken out of Europe effectively against our will," Scottish National Party leader Nicola Sturgeon said on Bloomberg Television Wednesday. Polls show Scots are generally more pro-EU than the far more numerous English.

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With different polls putting each side ahead, the BBC held a debate Tuesday evening at Wembley Arena in London before a raucous audience of 6,000. The fiercest arguments were within the governing Conservative Party. Both former London Mayor Boris Johnson and Energy Minister Andrea Leadsom, arguing for “Leave,” were confronted by the leader of the party in Scotland, Ruth Davidson.

“You are being asked to make a decision that is irreversible, we can’t change, we wake up on Friday and we don’t like it and we are being sold it on a lie,” Davidson said. “They lied about the cost of Europe, they lied about Turkey’s entrance to Europe,” she told the audience. “You deserve the truth.”

‘Independence Day’

Johnson urged the nation to make Thursday “our country’s independence day.”

“They say we can’t do it,” he said. “We say we can. They say we have no choice but to bow down to Brussels. We say they are woefully underestimating this country.”

The intra-Conservative discord highlighted the challenges Cameron faces uniting his party even if “Remain” wins. Sayeeda Warsi, a former chairman of the party, this week accused Justice Secretary Michael Gove of propagating “lies” about the EU, the latest in a string of increasingly personal attacks exchanged by senior Tories during the campaign.

Click here for a guide on what to look out for on the night of the vote count

The “Leave” camp had one key message in the TV debate -- “take back control” -- and hammered it home repeatedly. “I’m passionately a believer in immigration, but it’s got to be controlled,” Johnson said.

‘Project Hate’

The “Remain” side focused its fire on Johnson. His successor as mayor of the multicultural capital, Labour’s Sadiq Khan, accused him of running “Project Hate” over immigration.

Cameron said in Wednesday’s edition of the Financial Times that the race was “very close -- nobody knows what’s going to happen.”

Source: Bloomberg