February 22, 2016 / 12:37 PM / 4 years ago

Citi says chance of 'Brexit' has risen to 30-40 percent

London Mayor Boris Johnson prepares to speak to the media in front of his home in London, Britain February 21, 2016. REUTERS/Peter Nicholls

LONDON (Reuters) - U.S. bank Citi, one of the world’s largest currency traders, on Monday said it estimated the chances of Britain leaving the European Union had risen to 30-40 percent from 20-30 percent after senior UK political figures took sides on the issue.

Citi said since London Mayor Boris Johnson and Justice Secretary Michael Gove joined the “Brexit” camp, the chances of UK leaving the EU after June 23’s referendum had now increased and would prompt investors to become increasingly nervous.

“The effects of Brexit, if it happens, are likely to be large and painful in economic and political terms, both for the UK and the overall EU,” Michael Saunders, UK economist at Citi wrote in a note to clients.

Sterling dropped more than 2 percent against the dollar GBP=D4 to $1.4105, very close to its lowest in nearly 7 years as nervous investors stepped up sales.

(This version of the story corrects Justice Secretary Michael Gove’s spelling in para 2)

Reporting by Anirban Nag and Patrick Graham; Edited by Mike Dolan

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