Volatile trading saw the pound break through the 1.5 dollar mark, its strongest performance since December 2015, after Nigel Farage appeared to concede defeat in the face of a YouGov poll and City analysis showing a lead for Remain.
However a slim victory for Remain in Newcastle followed by a significant win for Leave 15 miles away in Sunderland dramatically shifted the balance in favour of Leave.
As Brexit campaigners in Sunderland erupted into cheers, jitters hit the currency market, sending the pound to 1.43 dollars – reportedly its biggest drop since the 2008 crash.
Analyst Joe Rundle, head of trading at ETX Capital, said: “To put tonight’s volatility in perspective, sterling’s plunge on that Sunderland count was bigger than Black Wednesday’s 4.1% drop. Markets are incredibly nervous now and it’s definitely tin hats time.”
The pound had surged by 5% over the past seven days as Brexit fears appeared to recede, enjoying its best weekly performance since 1985 and reclaiming all its losses since the start of the year. On Monday, sterling notched up its biggest one-day gain against the dollar for nearly eight years.
Chancellor George Osborne’s former economic adviser, Rupert Harrison, said the fluctuations in the pound were “an expression of the deep uncertainty that is going to face businesses all around the country and indeed in the whole of Europe”.
“How can they invest when they don’t know what is going to happen next, what their trading relationship is going to be,” h e told ITV News.
“We’ve had a lot of predictions during the campaign, the economics profession amazingly united saying this would be a negative shock to the British economy and I think we are seeing indications of that in these market moves tonight.”