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Pound sees biggest daily percentage gain since March 2009
The pound had fallen sharply over the course of last week, after polls appeared to indicate the Leave campaign was taking the lead.
But figures from the Commodity Futures Trading Commission, a US markets regulator, suggested a broader change in trading sentiment by Friday.
That data indicated that by the end of last week, currency speculators had began to back the pound again by reducing their bets against the currency.
That contrasted strongly to the first week of June, during which time traders' bets against the pound had risen to the highest level in three years.
However, analysts say there is likely to be more volatility this week.
"Following the large sterling moves over last two days and limited risk premium priced in at this point, sterling now looks more vulnerable to negative surprise from the polls," ING strategist Petr Krpata said in a research note.
Monday's shift in sentiment has boosted shares in banks and builders, which are seen as more vulnerable to damage if the UK votes to leave the EU.