Financial traders seemed to be betting on a majority of Britons voting to remain in the European Union today, sending the value of sterling up and the price of safe haven UK government bonds down.

The value of blue-chip shares on the FTSE 100 index were also lifted in a reflection of a broadening confidence among many in the markets Britain would avoid an economically-damaging exit from the 28 member trading bloc.

Sterling rose through the morning to a 2016 high of $1.4946, supported by late polls showing a growing lead for Remain. Against the euro the pound was also up, touching $1.3077.

Sterling hits highest level against dollar of 2016

Reuters Eikon

UK government bonds, regarded as safe haven assets by traders, have tended to rise in value when the perceived Brexit threat has grown. But today they retreated, with the 10-year UK Gilt yields, which move inversely to the prices of the government bonds, increasing by around 5 basis points to 1.277 per cent.

The FTSE 100 Index of leading UK-based companies rose 1.23 per cent to 6338.1, taking gains for the week so far to, 5.4 per cent, the biggest weekly advance since December 2011.

“The markets have voted, and it’s ‘remain’ ” said Quincy Krosby, market strategist at Prudential Financial in New Jersey.

Yet gains in several markets were surrendered in later afternoon trading, which some analysts attributed to “jitters”. And foreign exchange experts predicted that, despite the apparent strong expectation of many traders of a Remain victory, there was still likely to be volatility in the value of the pound after the results started to appear.

“We expect some initial reaction in Sterling to the exit polls after 10pm, with the main excitement likely to be in the early hours of Friday morning once we starting getting the results in” said Andy Scott of HiFX.

Unlike with stocks and shares, it is possible to trade currencies 24 hours a day and many spread-betting firms, currency brokers and investment banks who make up the market have beefed up staffing levels through the night.

“The risk now is that the markets have gone too far [in pricing in a Remain victory]” said Mike van Dulken of Accendo Markets. “There’s less room for a relief rally and there could be a major shock if the polls are wrong”.

Chris Saint of HL Currency agreed. “Clearly the key issue now for currency markets is whether rising expectations that the status quo will prevail are well-placed….Dramatic exchange rate swings are to be expected regardless of the result, with a sharp drop in the pound’s value possible in the event of a Brexit” he said.

Some, including the legendary hedge fund boss George Soros, have predicted sterling to fall by up to 20 per cent against the dollar in the event of a Brexit vote. Various market measures show that priced in sterling risk is more elevated than at any point since the global financial crisis.

Greg Secker, founder of FX Capital and Learn to Trade, said he had seen a punts coming in on sterling “every minute of the day” and that he expected more through the night.

Mr Secker added that despite the rise in sterling, 90 per cent of the wagers were on the pound falling. “There’s no real upside in going long. Everyone’s going short” he said.

Mr Secker explained that this represented a judgement from gamblers about where there was possible “value” in the betting market, rather than an expectation of what was most likely to happen.

“If you bet £100 a point for sterling to fall it’s not really going to go upward. It’s not going to rally 1,000 points and you lose £100,000. It’s the downside where the action is” he said.