There was a calmer state of play in markets on Tuesday. The massive short-squeeze that saw the British pound rise the most in eight years and the FTSE 100 gain 3% could only go so far. It appears markets have made up their mind which way the referendum will go. But before the result is known, there is still two-way risk.

The FTSE slipped by less than half-a-percent in early trading dragged down by mining firms including copper miner Antofagasta, which fell alongside commodity prices. Bank shares bucked the trend, adding to recent gains as yields remain elevated above recent record lows. With Brexit front and centre of investors’ minds, the more internationally-exposed mining shares have moved out of the limelight.

The British pound gained more ground on Tuesday, aided by a drop in UK public sector borrowing. GBP/USD is sitting at its May 3 high and near its highest this year.

More prominent support for remaining in the EU from legendary investor George Soros, former UK supermarket chiefs and even ex-England football captain David Beckham will all go some way to sway public opinion. Mr Soros said a Brexit vote would cause a bigger drop in Sterling than on Black Wednesday when he famously made $1bn betting against it. Black Wednesday was an unexpected Black Swan event with direct implications for the valuation of the currency. It seems far-fetched that Brexit, something polls have indicated could easily happen, would have anything close to a similar effect.

The two polls released on June 21 were split down the middle. An ORB poll gave Remain a seven-point lead whilst another from YouGov gave Leave a two-point lead. The mixed poll results suggest the vote is too close to call. Which beggars the question where the apparent confidence in betting and financial markets has come from? If the jump in Sterling and equities is purely investors repositioning

US stocks look set for a higher open on Tuesday ahead of testimony from Fed Chair Janet Yellen to the Senate Banking Committee.


USA pre-opening levels

S&P 500: 6 points higher at 2,089

Dow Jones: 46 points higher at 17,850

Nasdaq 100: 11 points higher at 4,411


CMC Markets is an execution only provider. The material (whether or not it states any opinions) is for general information purposes only, and does not take into account your personal circumstances or objectives. Nothing in this material is (or should be considered to be) financial, investment or other advice on which reliance should be placed. No opinion given in the material constitutes a recommendation by CMC Markets or the author that any particular investment, security, transaction or investment strategy is suitable for any specific person.