Brexit’s Big Short: How Pollsters Helped Hedge Funds Beat the Crash

Private polls—and a timely ‘concession’ from the face of Leave—allowed the funds to make millions off the pound’s collapse.

By Cam Simpson, Gavin Finch and Kim Chellel and cross-posted from Bloomberg

At 10 p.m. on June 23, 2016, Sky News projected the words “IN OR OUT” across the top of a London building as an orchestral score ratcheted up the tension. “In or out—it is too late to change your mind,” declared Adam Boulton, the veteran anchor, seated in a makeshift studio across from Big Ben. “The polls have closed in the U.K.’s historic referendum on EU membership.” Election nights are major productions for British broadcasters, but Brexit was bigger, with Sky viewers watching worldwide.

After the dramatic intro, Boulton jumped straight in with a huge exclusive, declaring he had “breaking news.” Nigel Farage, the global face of the Brexit campaign, had given Sky what sounded like a concession. His photo and a statement filled the screen, as Faisal Islam, Sky’s political editor, read Farage’s words aloud: “It’s been an extraordinary referendum campaign, turnout looks to be exceptionally high and [it] looks like Remain will edge it. UKIP and I are going nowhere and the party will only continue to grow stronger in the future.”

In the next segment, Boulton delivered another exclusive. Joe Twyman, head of political research for YouGov, one of the U.K.’s most prominent polling firms, appeared on set with the results of an online exit poll conducted for Sky. He explained that the firm had been tracking the same voters—and they had moved farther into the Remain camp that day. Based on that, Twyman said, “We now expect that the United Kingdom will remain part of the European Union. It’s 52 percent Remain, 48 percent Leave, and it’s still close and it’s still too early to know definitely—but, based on the figures that we’re seeing, based on the trends that have occurred, and based on historical precedent—we think that Remain are in the strongest position.” As in past elections, Twyman added, voters had embraced the status quo on Election Day.

Just four minutes after the polls had closed, and with meaningful vote counts still more than two hours away, Sky had aired a concession from the world’s most prominent Brexit backer, buttressed by data from YouGov. In a few hours these “scoops” would prove spectacularly wrong, but in the meantime they spawned worldwide headlines, including from Bloomberg News and virtually everyone else. This one, which ran atop the U.K.’s leading news site, the Mail Online, was typical. Referring to Farage’s UK Independence Party, it read:

BREAKING NEWS: UKIP leader Nigel Farage sensationally concedes DEFEAT within seconds of voting closing as final poll gives Remain the edge 52% – 48% in historic EU referendum

The news pushed the U.K.’s currency up—herding investors toward a cliff hours ahead of one of the largest crashes for any major currency since the birth of the modern global financial system. Trillions of dollars in asset values would be wiped off the books, but not just yet

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