Global markets were gearing up for a tense day of trading as the British public went to the polls to vote on whether to leave the European Union. Analysts pointed to "tough choices" for the U.K. whatever the result.
European markets opened slightly higher on Thursday as voting got underway, the culmination of four months of fraught campaigning.
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The main points of division among the public are the costs of EU membership, the benefits of such membership to the economy, sovereignty and immigration — with widely differing data used by campaigners on both sides.
Opinion polls have been close throughout the campaign and remain too close to call, with a significant number of voters undecided up to the last-minute. Turnout is nevertheless expected to be high, with around 46.5 million people eligible to vote, according to the Electoral Commission.
Markets were given a boost by the polls released on the eve of the vote by ComRes, conducted for the Daily Mail newspaper and ITV television, and YouGov for The Times newspaper in London, which showed a last-minute increase in the number of voters supporting the "Remain" campaign.
The pound rose to a six-month high against the dollar following the polls, touching $1.4847. It was trading at $1.4793 around 5:30 a.m. London time (12:30 a.m. ET). It should be noted that two other polls, conducted by Opinium and TNS and also published on Wednesday, gave the leave vote a narrow lead.
Investors were more cautious in Asia, where stocks traded mixed on Thursday following losses in U.S. stocks and as markets remained on edge ahead of the U.K. vote. Several large banks have issued warnings over the possible ramifications of a so-called "Brexit" vote, with market volatility and a decline in sterling predicted should the majority of U.K. voters opt to leave the EU.
Whatever the outcome of the vote, analysts are pointing to difficult choices still need to be made by the U.K. government and say that the future of Prime Minister David Cameron, who has led the remain campaign, remains in the balance.
If a Brexit result is announced, Cameron will at some time have to activate Article 50 of the 2009 Lisbon Treaty which sets in motion the process of leaving the EU — which can take up to two years to complete. Once activated, there is seen as no easy way back for the U.K. (all other 27 EU nations would have to agree to allow the U.K. to return).
Craig Erlam, senior market analysts at OANDA, said that the referendum was "arguably the biggest risk event of the year."
"With a number of polls suggesting the race is neck and neck, I would expect the markets to be quite volatile at times over the next 24 hours. Moves in the pound in particular could be quite wild once the voting closes this evening and the results start to be released," he said.