Investors are putting billions of pounds worth of bets on the pound crashing should Britain vote to leave the European Union in June.
According to data compiled by Bloomberg, investors have piled up more than £11 billion ($15.5 billion) in currency options that would profit is the pound falls more than 4% after the UK’s EU membership referendum on June 23rd.
Currency traders are expecting the pound to fall below $1.35, a level not seen since the 1980s, in the event of a Brexit.
Sterling traders have become increasingly jittery about the prospect of Brexit and its impact on the UK economy since the referendum date was officially confirmed, and news suggesting that Britain leaving has invariably sends the pound lower.
Yesterday the pound slipped substantially after an opinion poll from ICM suggested that leaving the EU is now a more popular option than remaining. When Mayor of London and Conservative MP Boris Johnson announced his intentions to back the “Leave” campaign in late February, the pound crashed, losing more than 2% in a single day, and hitting a seven-year low.
Those jitters have sent the volatility of the pound, as tracked by CBOE, surging to levels not seen in over a year. Here’s how that looks:
Warnings about the impact of Brexit on the pound have been widespread.
In early March, FX trading firm Caxton, warned that Brexit could cause a “currency crisis” in the UK, while last week, the Bank of England essentially said that the prospect of Brexit is the main reason for the pound’s fall — which has seen it drop more than 17% since October.
NOW WATCH: The real estate trick billionaires use to sell their penthouses faster and for more money
Business Insider Emails & Alerts
Site highlights each day to your inbox.