Sterling jumped above $1.44 on Tuesday for the first time this month as nerves about a possible Brexit were soothed a little by two polls showing the "In" camp well ahead in the run-up to Britain's referendum on European Union membership. A string of recent surveys had shown a drift towards the "Out" camp ahead of the June 23 ballot, leaving the outcome too close to call. But polls from ICM and ORB late on Monday gave the campaign to remain in the bloc a lead of eight and 11 points respectively.
Helped also by a strong recovery in oil prices and risk sentiment, sterling soared by more than 1 percent to hit $1.4420 in afternoon trading in London, its highest since March 31. Britain's hefty current account deficit makes investors wary of the currency at times of market turbulence, while strong risk appetite drives demand for the pound. But after Bank of England Governor Mark Carney told members of parliament that uncertainty around the referendum was already weighing on the economy, sterling eased back a little, to $1.4394. That still left it up around 0.8 percent on the day. "There was a bit of a bump in the road after Carney spoke but in general sterling has done well today," said London Capital Group analyst Brenda Kelly.
"I wouldn't say it was all pound-driven. The euro is also higher and there is a real pushback on the dollar right now," she added. Sterling was also up around 0.3 percent against the euro at 79.01 pence, having earlier traded as high as 78.82 pence, its strongest this month. The pound is down around 6 percent since the start of the year on a trade-weighted basis, with most banks saying it would fall sharply in the event of a Brexit. But it has so far resisted a return to lows of $1.38 hit in February when the referendum date was announced.
Analysts say that in the run-up to the vote, sterling is likely to be increasingly sensitive to any signs that a Brexit is more likely. "(The new polls were) a nice turn for the 'remain' campaign after tighter polls hit the headlines over the past week," said Tobias Davis, head of corporate treasury sales at Western Union in London.