Some of the world's largest macro funds are positioned for a rise in sterling and set to benefit if Britain votes to stay in the European Union in a referendum in three weeks time, data tracker eVestment said.
Seven of the top 10 macro funds reporting to eVestment, which hold a combined $190.65 billion in assets, are positioned to gain if the pound strengthens against the dollar. The total value of the top 10 funds' assets could rise 0.55 percent if the pound gains 5 percent after a 'Remain' vote.
The bets emerged after both April and May turned out to be relatively good months for the Remain campaign. But this week polls suggested the 'Leave' camp is ahead. Bookmakers have consistently put the "Remain" campaign well ahead - betting website Betfair puts the chances of leaving around 26 percent.
Worries about Brexit drove the pound down 11 percent on a trade-weighted basis between mid-November and early April, when it hit a 2 1/2-year low. But it has since recovered around 4 percentage points.
"There have been some managers who were shorting the pound earlier on," said Kevin Lyons, senior investment manager at Aberdeen Asset Management.
"Some have tactically switched it to being long the pound now that it looks like Brexit is a little less likely. We have seen a couple of managers playing more volatility around the pound, not saying they are going to leave or not leave but just that they expect some volatility leading up to the vote."
Trends in currency derivative markets show implied sterling volatility, or the cost of hedging against sharp swings in its value, over the next month has jumped to its highest in more than seven years, at nearly 20 percent.
While there is still substantial bearishness in the market towards the pound, that could vanish if Britain votes for the status quo. So, some speculators have already eyed gains against the dollar of over 20 cents, up to 15 percent above current rates, with option triggers or 'strikes' as high as $1.65 on the day after the poll.
Options that would pay out if sterling hit $1.58 and above have also been placed, for June 27. Dealers say the trades are few, but if polls show the "Remain" camp edging ahead, demand for such option strikes could gather pace.