LONDON: Sterling retreated from a one-month high against the dollar on Friday, hurt by a poll that showed that those campaigning for Britain to leave the European Union had taken a 9-point lead, triggering renewed anxiety among investors.
The YouGov survey, taken in the two days after Prime Minister David Cameron set out his proposed changes for Britain's relationship with the EU, represents the biggest lead for the 'out' campaign since the referendum wording was agreed last September.
The poll showed 45 percent of Britons would vote to leave the bloc compared with the 36 percent who want to remain. Nineteen percent said they did not know or would not vote. Markets and punters are betting that the referendum is likely to be held in June.
Sterling was down 0.6 percent at $1.4507, having hit a one-month high of $1.4672 on Thursday after Bank of England chief Mark Carney quashed talk that interest rates could be cut in the coming months.
The drop in the pound was significant as other major currencies traded in a narrow range on Friday with investors holding fire before the US non-farm payrolls report.
Sterling was lower against the euro. The single currency, often preferred during times of financial market stress, was up 0.4 percent at 77.13 pence, not far from a one-year high of 77.56 pence struck on Jan. 20.
"We suspect the combination of a June Brexit vote and a shaky risk environment due to emerging market growth concerns will unambiguously weigh on sterling," said Viraj Patel, currency strategist at ING.
"We retain our forecast for sterling/dollar to move below $1.40 in the second quarter of 2016." In its Quarterly Inflation Report released on Thursday, the BoE cut its economic growth forecasts due to a gloomier global outlook.
The minutes from the BoE's latest policy meeting also showed the lone advocate of a rate hike reversed his position this month.
And while the pound initially fell after the minutes and the Inflation Report were released, it recovered after Carney said that the next move by the BoE would be a rate hike and not a cut as some in the market were pricing in.
Nevertheless, traders expect the uncertainty stemming from the Brexit referendum would keep trading in the pound rather choppy in the coming months.
Goldman Sachs said on Thursday sterling could fall as much as 15 to 20 percent if Britain votes to leave the EU, because foreign investors could pull out and dry up the capital inflows needed to fund the current account deficit.
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