If you’re going on holiday, you might be thinking whether or not to quickly change your pounds into euros or dollars before the EU Referendum result comes in on Friday.
The pound is sensitive to swings in sentiment as to whether the UK will vote to remain in or leave the European Union.
At the moment the pound is rallying, with markets seeing a stronger possibility of a remain vote winning.
Around 11:10 a.m. BST (6:10 a.m. ET) sterling is around 1.2% higher against the dollar, to trade at $1.4880.
That’s despite recent polls showing the result is too close to call. Currency traders have been watching the betting markets for a sense of how the vote might go. At the moment, the Betfair betting market is showing an 86% chance of a remain win. This is great if you’re about to go on holiday.
While that’s good upside, it’s not worth the risk of holding on to your pounds. In the case of a Leave vote, or Brexit, the pound could drop suddenly by as much as 15% according to HSBC or more.
George Soros, who famously made £1 billion betting against the pound on “Black Wednesday,” said “that after a Brexit vote the pound would fall by at least 15% and possibly more than 20%.” And analysts at Credit Suisse said on Wednesday, factors could conspire to make the fall-out even worse.
So, if you’re going on holiday soon and don’t want to take the huge downside risk out there at the moment, now might be a good time to hit the bureau de change.
Here’s a graphic explaining everything about the referendum: