Investors received a sharp reality check this week after a new poll on the upcoming referendum in the U.K. highlighted that the vote might just be closer than many people were thinking.
With just an hour left of the trading session to go on Tuesday, two polls from U.K. newspaper The Guardian and public opinion researcher ICM suggested voters were split 52 percent - 48 percent in favor of the country leaving the European Union, a so-called "Brexit".
The FTSE 100 quickly sank to 6,190 points from a level if 6,259 points on Tuesday. The London benchmark was also 0.7 percent lower in mid-morning trade on Wednesday. The pound was worth around $1.465 but also pushed lower to $1.448 and extended those losses on Wednesday morning.
"While lots of folk panicked yesterday on close polls, the bookies still say 72 percent likelihood of 'no Brexit' (but the bookies have been wrong previously…). The 'stay' campaign has to get its act together... the momentum has swung against them," Bill Blain, senior fixed income broker at Mint Partners, said in a morning note Wednesday.
Bookmaker Ladbrokes is currently predicting there's a 27 percent chance that Britons will vote to leave the European bloc in the upcoming referendum. This percentage has edged lower over recent months but the company said Wednesday that it had just experienced the biggest swing to the "leave" camp in any day of the campaign.
This clear difference between the bookies, the polls and the markets on the outcome of the referendum has led Timothy Ash, an emerging market analyst at Nomura, to believe that there is something wrong.
"I guess those of us living in the U.K., see this as a close run contest still, hard to definitively call, albeit the money (bookies, and markets) seems to be on a 'remain' vote. But the bookies can be wrong, as the recent U.K. general elections and the (Leicester City F.C.) Premier League win this season proved quite aptly," he said in a note.
Meanwhile, some analysts are expecting more intraday slides for the U.K.'s currency as we head ever closer to the vote on June 23. FXTM Research Analyst Lukman Otunuga believes sterling could be poised to sink lower as a combination of dollar appreciation and sterling vulnerability open a path for "sellers to attack."
"From a technical standpoint, this pair (sterling-dollar) is in the process of turning bearish and could sink lower if bears could concur 1.440 ... previous support at 1.45 could transform into a dynamic resistance that may encourage bears to send prices towards 1.44," he said.