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Investors seeking guidance on whether Britons will vote to leave the European Union find clear answers from bookmakers and punters.
A month before the referendum, bookmakers’ shops on British high streets and betting exchanges on the internet clear trend.
Bookmakers are offering odds of 1/6 – indicating a more than 80 percent probability – that Britain will vote to remain in the EU on June 23. By contrast, opinion polls present a confusing picture of voters’ intentions, with some saying the “remain” camp has a big lead while others have put the two sides neck-and-neck.
“Betting is the market’s attempt to summarise the polls and adjust for all of their fragilities,” said Insight Investment currency fund manager Paul Lambert. He says he looks more at the odds than the polls when deciding how to trade currencies affected by the vote – particularly sterling, but also the euro.
With most economists agreeing that the British economy would take at least a short-term hit from a “Brexit”, financial markets are sensitive to any signals on how the nation will vote, including opinion polls. Sterling strengthened sharply last week after an IPSOS poll showed 55 percent supported remaining in the EU, with only 37 percent backing Brexit.
But the polls’ fragilities were exposed in last year’s parliamentary elections, when they failed to signal that Prime Minister David Cameron’s Conservatives would win a majority.
This is one reason why investors are turning to William Hill and Ladbrokes betting-shop chains more commonly associated with horse racing and football than politics.
Investors also like the fact that the “bookies” and online betting exchanges can adjust the odds in real time to reflect developments that could affect the vote, allowing them to make trading decisions faster.
A Scottish referendum in 2014 marked a more comfortable victory for the bookies as the betting odds consistently implied that voters would reject independence by a wide margin.
Such sites allow gamblers to get in and out of positions, much like stock or currency traders, so the odds react even faster to news than traditional bookies’ odds.