Cautious trade ahead of the EU referendum

Brussels is hoping the UK will vote to stay in the European Union.
Brussels is hoping the UK will vote to stay in the European Union.
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Sterling rose and Asian stocks crept higher in cautious trade on Thursday ​al​though many investors sought shelter in safe-haven assets such as the yen and government debt as they braced for Britain's vote on its fate in the European Union.

Sterling climbed to a six-month high against the dollar, cementing an impressive 6 per​ ​cent rise since last week as investors squared short positions ahead of the referendum later in the day.

European stocks are expected to open flat to slightly higher.

While two opinion polls published late on Wednesday, a few hours before voters were due to begin to cast their votes, showed the Remain camp nudging ahead in the closely divided campaign, trading activity in Asian hours remained erratic, thin and cautious.

​​Isao Kubo, an equity strategist at Nissay Asset Management, said: "Most people at this point expect a rise in the market on expectations the vote will favour Britain staying in the EU.

"But you never know, and it will be clear by tomorrow so you don't want to take new positions now."

Investors remained largely on the sidelines ahead of the referendum as a closely fought vote meant any large positions taken before the outcome was vulnerable to being stopped out.

Some investors such as George Soros expect the value of the pound to decline by as much as 15 per​ ​cent from current levels in the event of a British exit from the EU.