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The moves suggest investors and companies are becoming less complacent and beginning to take seriously the prospect that Britain might be on a clear path to leave the EU within three months.
Several analysts view the vote as one of the biggest global market risks of the second quarter, and expect uncertainty to influence the Federal Reserve’s policy meeting on June 14-15.
With less than three months to the June 23 referendum on UK membership of the European Union, the signal from the options market is the latest tangible sign of nerves that fears over Brexit are inducing among traders and investors.
In the spot currency market, sterling has had a rough ride, buffeted by a mix of Brexit fears and poor data, giving the pound its worst quarter in more than seven years.
Sterling’s value has slumped 7 per cent this year on a trade-weighted basis. On Friday, the pound fell to a 16-month low against the euro, leaving the single currency worth 79.6p, capping a grim weak that saw the UK record its biggest postwar current account deficit.
The corporate sector is showing ever greater signs of anxiety over Brexit. Business investment fell 2 per cent in the final quarter of the year, showing companies were putting projects on hold ahead of the vote. In a Deloitte survey of chief financial officers on Monday, three quarters said it was a bad time to take risk on to their balance sheets, the most cautious reading of this survey since late 2012.
Full article on Financial Times (subscription required)