Why The Just Released YouGov Poll May Have Sealed The Outcome Of The UK Referendum

Moments ago, when the latest YouGov poll came out and showed a modest lead of 51% to 49% for Remain (up from 44% for Leave and 42% for Remain as of June 19), showing a steep drop in the momentum of the Leave campaign…

and in the process pushing the FT poll tracker in “Remain’s” favor at 47% to 45%, up from 44% to 45%…

… it may have effectively sealed the fate of the Brexit referendum.

Here is the reason.

As Reuters reports, like in 2014 and unlike in national elections, British broadcasters on Thursday will not conduct exit polls – in which people are asked as they leave polling stations how they voted – once polling closes at 10pm local time because the margin of error for an event which has little precedent is too large.

However, that same logic apparently does not prevent the very same YouGov pollster cited above, to publish a poll showing how people have voted in the European Union referendum shortly after polling stations close on Thursday. The poll will be based on responses from a pre-selected group of people seen as representative of the wider electorate on how they actually voted in the referendum. Its findings are due to be announced by Sky News soon after polling stations close at 10 p.m. (2100 GMT).

This means YouGov will be the de facto exit poll, and in the absence of official exit polls, the YouGov survey will be closely watched by FX traders who will not be sleeping much if at all tomorrow night.

Where it gets murky is that the online survey will be drawn from a panel of people who have previously been polled by YouGov about their voting intentions and who have agreed to share their decision once they have voted, a spokesman for YouGov said. The figures will be weighted for a number of factors, he added, declining to comment further on specifics. No figure for the number of people to be surveyed was immediately available.

One thing is clear: the market will impute the most recent precedent, as well as the sharp drop in Leave “momentum” as an indication of what will happen, which means that the just released lead of 51% for Remain will be seen as suggestive of what will happen tomorrow when YouGov releases its quasi-exit poll in less than 12 hours.

As Reuters adds, YouGov will be “hoping to repeat its successful prediction of the 2014 Scottish independence vote.” Back in 2014, a YouGov poll released as Scottish polling stations closed came very close to accurately predicting the result of Scotland’s independence referendum. That poll showed the campaign against independence winning with 54 percent of the vote. The official result gave the anti-independence campaign 55.3 percent of the vote.

However, while it was successful in 2014, it was hugely mistaken in 2015. YouGov and other major pollsters failed to predict the outcome of Britain’s 2015 parliamentary election. Prime Minister David Cameron’s Conservatives won it with a comfortable, albeit slim, majority, despite months of opinion polls showing them and the main opposition Labour Party running neck-and-neck.

The event was labelled a “fiasco” for pollsters and was followed by an inquiry by the British Polling Council. Only one exit poll was close to being right.

So will 2016 be another “2014” success story or a “2015” fiasco? Judging by the surge in cable, which just exploded to a fresh 2016 high of 1.48 (and briefly rising above it), which as a reminder was the “extreme print” level that Citi predicted cable would hit in case of a Remain vitory…

… the market – if only for now – is 100% certain that a Brexit will not happen.

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