Investing.com - Wednesday marked a three-month countdown to the U.K.’s June 23 referendum on its membership in the European Union (EU), as fears of a Brexit, as a vote to leave the group is known, increased pressure on the pound.
Sterling lost more than 1% on Tuesday, driven to one-week lows, as terrorist attacks in Brussels sparked speculation that Britons would be compelled to leave the EU.
As investors sought protection against another leg down in the British currency, three-month pound options soared to their highest level since mid-2010 in trade with the dollar, while the euro/sterling implied volatility hit its highest level since April 2009.
The latest ICM poll on the referendum released on Wednesday showed that 43% of U.K. respondents were in favor of a Brexit, compared to 41% who preferred to remain in the EU and 16% who were undecided.
Additionally, bookmaker Paddy Power narrowed the odds on a Brexit to 36% in the wake of the attacks in Belgium, compared to odds of 33% on Monday, while political prediction website PredictIt placed the probability of leaving at 45%.
In this light, the pound continued to show weakness on Wednesday as the GBP/USD dropped 0.27% to 1.4170 at 9:42AM GMT, or 5:42AM ET, while EUR/GBP was flat at at 0.7895.