Traders predict 81% chance of Remain win as FX and Equity markets surprisingly calm on Brexit Day

Is it the calm before the storm?

Or just plain ol’ calm?

With Brexit Referendum Day finally here and UK residents well into their day of voting, financial markets were behaving quite nicely with a very clear positive risk-on bias.

In the UK, the FTSE 100 was up 1.5% two and a half hours into trading. US equity index futures were predicting a 1% rise when trading resumes across the Atlantic in a few hours.

The British Pound was similarly continuing its winning streak which began last Thursday, when news broke of popular pro-Remain MP Jo Cox’s murder. The GBPUSD was up another 1%, approaching the 1.49 level which it hadn’t seen since late 2015.

All indications in the markets were leaning toward predicting a Remain victory in today’s referendum. And betting on the actual vote result showed similar sentiment.

IG GroupIn the political binary market created by online spreadbetting firm IG Group Holdings plc (LON:IGG), traders placing actual bets were predicting an 81% chance of Remain winning, up from the 76-78% range yesterday. That is, placing a bet to win £100 if Remain were to win cost traders £81 (as at 10:34am UK time), while a bet to win £100 should Leave win cost just £19. (Note that there are spreads around those figures, they represent the midpoint of the pricing spread).

Unlike notoriously unreliable polls which have failed to predict the outcomes of several recent UK votes, political binary markets at firms such as IG have a strong track record in correctly predicting political events. Not too surprising, since they represent where traders are putting real money to work. In 2012 political binary trading correctly predicted Barack Obama’s Presidential election victory and Boris Johnson’s London Mayoral election victory. They also correctly predicted a victory for the “No” vote in the Scottish independence referendum in early 2014.

We will continue to bring LeapRate readers all the key Brexit developments as they occur.

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