The depreciation of the pound will continue

The pound is set to extend its decline, the biggest among rich-world currencies, beyond the day of the referendum that could lead to a “Brexit.”

Sterling has already dropped at least 2 percent versus all of its Group-of-10 counterparts this year, and options prices suggest it will fall further against every one over the next three months. That would see the U.K. currency’s losses extend beyond June 23, when the public will vote on the nation’s membership of the European Union.

“We’re in a situation where it’s the ‘Brexit’ risk that will dominate markets,” said Ned Rumpeltin, European head of currency strategy at Toronto Dominion Bank in London. Though economic data are showing an improvement, “what captures all the headlines is the risk of the referendum,” he said. “Longer-term, the pound is going to struggle.”

There’s a premium for options protecting against sterling losses over contracts betting on a gain.

The biggest is the 5.6 percentage-point premium for three-month options hedging a slide versus the yen, data compiled by Bloomberg show. The gap on pound-dollar contracts widened to a record 4.4 percentage points. That’s more than double the difference on March 22, before the measure encompassed the day of the referendum.