- Nigel Farage made predictions on the night of the Brexit vote that turned out to be wrong, even though he knew of two private polls that predicted the correct outcome.
- Sources in the FX trading world told Business Insider of a speculative theory that someone placed a massive "knock-in short" against the pound.
- Such a bet would require the pound to move up on June 23 before it fell, which is exactly what the pound did after Farage spoke.
- FX traders say pricing data on the night shows the "knock-in short" theory is plausible.
- Farage told Business Insider that this is "a crackpot lunatic conspiracy theory."
LONDON — As the EU Referendum approached in 2016, foreign currency traders knew they were looking at a "multi big fig" day. The beauty of June 23 from a trader's perspective was that whichever way the vote went, it would move the pound against the dollar dramatically — "multiple big figures" — and not the mere decimal places that characterize most currency movements. If Britain voted to remain in the EU, the pound would bounce sharply up against the dollar. If the UK voted to leave Europe, the pound was expected to fall quickly.
The Brexit vote was going to be close. Polls suggested a 52% vs 48% victory for Remain, but that was near the margin of error. Major polling organisations had declined to conduct exit polls on the day because the vote was so unusual they had no comparative data to ensure their accuracy. The result was going to be tight and uncertain.
See the rest of the story at Business Insider
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