We estimate that sterling would rebound from $1.39 to $1.50 against the dollar if the UK voted today to remain a member of the EU. But if a similar move occurs in response to a vote to stay in the club in four months’ time, we suspect it will be short-lived given the prospects for monetary policy in the UK and the US. And if the vote is to leave, we think the exchange rate could fall swiftly to $1.20.
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