BlackRock bond fund adds to gilt holdings eyeing Bank of England QE

LONDON, July 21 (Reuters) - One of BlackRock (Sao Paolo: BLAK34.SA - news) 's bond funds has added to investments in British government debt after the country's vote to leave the EU last month as it expects the Bank of England to start buying the debt in an effort to stimulate the economy.

"Since the initial surprise in financial markets to the outcome of the EU referendum, we have added to our gilt exposure both in relative and absolute terms," said Marilyn Watson, head of global unconstrained fixed income product strategy at BlackRock.

"We believe that some additional form of QE from the BoE would include purchases of gilts," she said in a note.

She (Munich: SOQ.MU - news) said the pound's current level of $1.32 reflected much of the uncertainty around the political process after the vote and that the fund was "modestly long" sterling.

Last week, Scott Thiel, BlackRock's deputy CIO and head of global bonds, said sterling would fall further, although not to parity with the dollar unless in "extreme circumstances". (Reporting by John Geddie, editing by Nigel Stephenson)