The UK's referendum on European Union membership is just days away, and investors have been unsure what to make of the potential for a Brexit — Britain leaving the EU.
Nowhere has that uncertainty been more pronounced than in the currency markets.
Since the referendum campaign began, the pound's volatility has surged to its highest level of all-time— surpassing levels seen during the financial crisis. A big move in sterling is expected whatever the result.
Understandably, investors in the currency are a little bit worried about what to make of the huge amount of data, the sheer number of polls, and the changing odds around the referendum, as well as what might happen to the pound after the vote.
To guide investors through that minefield, Josh O'Byrne, a strategist with Citi FX has compiled a handy guide to the biggest and most frequently asked questions surrounding the referendum, as well as providing some useful charts about the expected issues.
Check out the questions and answers below.
1. What turnout should we expect?
Answer: Turnout will be roughly 60-65%.
"Polls have suggested in recent weeks that participation will be high and engagement over the referendum has been increasing. A higher turnout is thought to benefit the ‘REMAIN’ vote with polls suggesting those indicating ‘LEAVE’ are more determined to vote. Polling agencies are however unsure the degree to which self-certainty of voting will correlate in this case.
The latest odds suggest the turnout is most likely to be in the 60-65% bucket. This compares with a 66% turnout for the 2015 General Election and 84.6% turnout for the Scottish referendum."
2. When will the results come in?
Answer: Results will start coming in at around 12:30 a.m, and the final result should drop at around 6:00 a.m.
"The electoral commission has estimated the reporting time of each local counting area. They suggest the first results could be coming in at 00:30 on June 24, but the bulk will be after 02:00. Using population estimates for each area we arrive at Figure 2. This suggests that 50% of the vote could be counted by 03:00. This compares with the constituency count times where 50% were covered around 04:00."
3. What's going on with the polls?
Answer: Phone polls largely point to remaining, online polls are leaning towards Brexit.
"We prefer to track the polls on an individual basis given there have been lasting gaps between some of them; the trend gives us a (slightly) clearer picture.
The polls more recently have swung toward LEAVE. These have largely been online but telephone polls have shown a similar trend (Figure 3, 4). The betting odds moved higher to an implied probability of 80% associated with REMAIN but now show it to have fallen close to 69%."
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