Sterling hits 2-1/2-week high as "In" camp leads in Brexit poll

By Jemima Kelly

LONDON, May 18 (Reuters) - Sterling hit a 2-1/2-week high against the euro on Wednesday after a poll showed the "In" campaign clearly in the lead ahead of the June 23 referendum on Britain's European Union membership.

Worries that Britons could vote to leave the EU have weighed on the pound since late last year. Most economists reckon Brexit, as leaving the EU is known, would deal a blow to Britain's economy, and drive down the currency further.

The latest poll, conducted by YouGov (LSE: YOU.L - news) for The Times newspaper, showed the "In" camp with a four-point lead at 44 percent, although the lead was attributed to a change in the polling firm's methodology.

The previous YouGov poll for The Times, published 10 days ago, had given the "In" camp a two-point lead.

Other polls over the past two days have given mixed signals but most point towards a vote to remain in the EU. One, a telephone poll by polling firm ORB, gave the "In" camp a 15-point lead. ICM published two polls on Monday, one a phone survey which put "In" ahead and an online poll that showed "Out" in the lead.

"Referendum polls had been supporting the currency in recent days, however realisation around the fundamental cracks appearing in the underlying economy are starting to generate doubts," said Western Union's head of corporate treasury sales, Tobias Davis.

Sterling gained 0.4 percent to hit 77.94 pence per euro , its strongest since April 29. Against the dollar though, sterling inched down 0.2 percent to $1.4427.

The pound's gains against the euro on Wednesday came despite a lower-than-expected monthly read on headline and underlying inflation on Tuesday, which added to the case for interest rates to stay on hold for the next year or more.

Labour market data is due at 0830 GMT.

"Sterling has been resilient recently, which largely looks a function of very short positioning and signs that Brexit support may be waning," wrote ING currency strategist Chris Turner in a research note to clients. (Editing by Jeremy Gaunt)