Sterling falls on latest Brexit polling, eyes on BoE

By Patrick Graham

LONDON, April 14 (Reuters) - Sterling fell by around half a percent on Thursday after a YouGov (LSE: YOU.L - news) poll was the latest to show Britain split down the middle on June's referendum on whether to leave the European Union.

Strategists and traders said there was speculation of a "dovish" message on interest rate policy from the Bank of England's regular meeting later, given perceived risks to the economy from Brexit.

Sterling has held up well since falling to $1.38 at the start of the campaign in February, but most major banks assume it will come under more pressure if the polls remain tight, or favour the "Out" camp in the final weeks before voting.

The YouGov poll showed voters evenly split at 39 percent for either side. Public trust in Prime Minister David Cameron fell 8 points to just 21 percent.

"Sterling is one of the underperformers today so there is a sense that the YouGov poll had a bit of downward impact," said HSBC strategist Dominic Bunning.

"It (Other OTC: ITGL - news) does seem like the tos and fros on the referendum polls will continue to be a driver in the weeks ahead."

The pound fell 0.6 percent to $1.4124 and 0.4 percent to 79.63 pence per euro in early trade in London.

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Falls on Wednesday and Thursday came after a generally brighter few days for UK markets, helped by a stabilising of oil prices and a handful of more optimistic signs on global growth and earnings.

But the IMF was the latest this week to underline risks from Brexit, and a number of major banks have said could knock a fifth off the value of sterling.

That and the risk that spooking investors could create problems with the funding of a current account deficit that soared to 7 percent of GDP in the final quarter of 2015, might argue for a rise in interest rates after a vote to leave.

Market chatter on Thursday was that minutes from the Bank of England's policy discussion published after its decision on rates might show it more concerned with the threat to growth.

But a number of analysts played down the prospect of the Bank wading into political territory.

"The central bank will remain on the sidelines ahead of the Brexit vote," Yann Quelenn, an analyst with broker Swissquote (Stuttgart: 1SQ.SG - news) , said.

"(But) we also believe that the chance of a rate cut exists this year. Downside pressures on the pound against the euro are still lively (and) it is on its way to testing the bottom at around $1.40." (Editing by Alison Williams)