Sterling hits 3-week high as Brexit poll gives "In" strong lead

By Jemima Kelly

LONDON, May 18 (Reuters) - Sterling hit a three-week high against a trade-weighted basket of currencies on Wednesday, after a new poll published just over a month before Britain's referendum on European Union membership gave the "In" camp an 18-point lead.

The new Ipsos (LSE: 0KA3.L - news) -Mori poll, commissioned by London's Evening Standard (Other OTC: SNDH - news) newspaper, found 55 percent of those surveyed supported staying in the EU, while just 37 percent wanted to leave. Earlier in the day, a YouGov (LSE: YOU.L - news) poll had handed the "In" camp a four-point lead.

According to betting website Betfair, the implied probability of a British vote to stay in the EU in the referendum on June 23 rose to 76 percent after the poll, up from 73 percent beforehand.

Sterling strengthened to a 2-1/2-week high of 77.62 pence per euro, having traded around 78.17 pence before. That left it up 0.8 percent on the day and helped sterling reach 86.6 against the Bank of England's trade-weighted basket of currencies, its strongest since April 27.

"Sterling is catching a solid bid on the latest surprise poll indicating a strong move in favour of the "In" camp," said Mizuho's head of hedge fund FX sales, Neil Jones. "The market I suggest is heavily hedged, running with short sterling exposure, and will likely turn buying. I sense there is further upside."

Having traded down against the dollar all morning, sterling also strengthened to $1.4538 after the poll, leaving it up half a percent on the day.

Worries about a possible Brexit have weighed on the pound since late last year, driving an 8 percent fall in the past six months on a trade-weighted basis. But since hitting a 2-1/2-year low last month, sterling has recovered by almost 4 percent.

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Earlier, mixed data showing the employment rate in Britain at a record high but earnings excluding bonuses growing more slowly than expected had nudged the pound downwards.

"I didn't read the data as overwhelmingly positive. There wasn't a lot of upside - I'm not convinced the jobless rate can fall that much further, so we're probably pretty close to full employment," said BMO Capital Markets currency strategist Stephen Gallo.

"I think weaker aspects of the data carry a bit more weight now in the run-up to referendum," he added. (Editing by Andrew Heavens)