Investing.com -- GBP/USD rose sharply on Wednesday to remain near five-month highs, as foreign exchange traders dismissed poll results, which showed the Leave campaign had gained momentum in the U.K. ahead of the historic Brexit referendum.
The currency pair traded between 1.4642 and 1.4775 before settling at 1.4768, up 0.0103 or 0.41% on the session. The Pound has closed higher against the U.S. Dollar in four of the last five sessions. Since the tragic assassination of Labour Party parliament member Jo Cox last week, the Pound Sterling has surged more than 5% against its American counterpart.
GBP/USD likely gained support at 1.3852, the low from Feb. 26 and was met with resistance at 1.4935, the high from Dec. 21.
Hours before polls opened in an enormously consequential Brexit referendum, the Pound pared some gains in U.S. afternoon trading before settling near-session highs. Following the close of markets throughout the euro area, a poll from Opinium showed that the Exit vote had taken a slight 45-44% lead, while a TNS survey found that the Leave camp jumped in front by a 43-41% margin, with 16% undecided. Still, British sportsbook Ladbrokes (LON:LAD) placed the probability of Remaining at 73% based on its live odds, down slightly from a 76% chance earlier this week. Notably, it will take the U.K. a minimum of two years to leave the European Union even if the Exit campaign prevails.
At the same time, analysts at UBS added a twist by offering predictions that the FTSE could plummet by 20% if the U.K. decides to leave the European Union. A day earlier, billionaire investor George Soros said the British Pound could also fall 20% given such a scenario. On Black Wednesday, nearly 25 years ago, Soros bet correctly against the Pound when the U.K. opted out of the EU's Exchange Rate Mechanism (ERM). In the ensuing week, the Pound tumbled 10%.
Over the last few months, prominent politicians and economists such as U.K. prime minister David Cameron, Germany chancellor Angela Merkel and International Monetary Fund managing director Christine Lagarde have issued stark warnings on the ramifications of a potential Brexit. At the same time, House of Commons Leader Chris Grayling, Culture Secretary John Whittingdale and former London mayor Boris Johnson have shown support for the Leave movement.
EUR/GBP fell 0.26% to 0.76656, while EUR/USD rose 0.31% to 1.1332.
In Washington D.C., Federal Reserve chair Janet Yellen reiterated her stance that a vote supporting a Brexit could have serious consequences on the global economy and financial markets. In testimony on Capitol Hill, Yellen told the House Financial Services Committee that she has yet to schedule an emergency meeting at week's end in the likelihood that the Remain camp is defeated.
The U.S. Dollar Index, which measures the strength of the greenback versus a basket of six other major currencies, fell more than 0.45% to an intraday low of 93.50, before rallying in the U.S. afternoon session to 93.81. The index is down by more than 5% since early-December.
The U.S. 10-Year fell two basis points to 1.69%, while the Germany 10-Year inched up one basis points to 0.06%.