LONDON: Sterling fell on Monday, trading at more than a two-year low against a trade-weighted basket, hurt by persistent worries about a possible British exit from the European Union.
With Britons due to vote in a referendum on June 23, an online survey by pollster Opinium for Sunday's Observer newspaper showed 43 percent support for Britain to leave the EU, ahead of 39 percent support for staying within the bloc.
That followed an online poll by TNS released on Friday which showed the rival campaigns for Britain to stay in or leave the European Union were running neck-and-neck.
Despite these polls showing a close contest, betting markets are still pricing in only a one-third chance that Britain will exit the EU, which it joined in 1973.
The uncertainty has kept the cost of hedging against sharp swings in the pound against the dollar and the euro elevated at around six-year highs, while demand to buy currency options that are betting on more sterling weakness are pretty steady.
Sterling was down 0.2 percent at $1.4205, while the euro was up slightly at 80.13 pence, not far from a peak of 80.20 pence struck on Friday, its highest since November 2014.
That put trade-weighted sterling at 84.2, its lowest since mid-December 2013. The index endured its worst quarter since late 2008 between January and March.
"This (move in the index) is a big move in a short period of time," said Stewart Richardson, chief investment officer at RMG Wealth Management.
"We have to deal with "Brexit". It is a binary outcome, and if the outcome is a vote to leave, we along with everyone else expect sterling to fall heavily. If we vote to stay in the EU, there should be some sort of bounce."
Global investors worry that leaving the EU would threaten the huge foreign investment flows Britain needs to fund its current account deficit, one of the biggest in the developing world at around 5 percent of gross domestic product.
Traders will eye a construction survey for cues after the manufacturing Purchasing Managers' Index (PMI) fell short of expectations on Friday. The survey showed new export orders contracting while the manufacturing sector stagnated last month.
"While the mounting uncertainty over the possible impact of a Brexit to the UK economy is ensuring that the pound remains depressed, domestic data which has pointed to further weakness in the UK economy simply provides the Bank of England a compelling reason to leave interest rates unchanged," said Lukman Otunuga, research analyst at FXTM.
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