UBS is warning markets to get ready for a June referendum on Britain's membership in the European Union, telling clients in a note today that while an In/Out vote in the autumn cannot be ruled out, it is much more likely the referendum will be held in a matter of months.
Economist David Tinsley and strategist John Wraith also said the probability of the UK leaving the EU is "up to 40 per cent".
Tinsley and Wraith also warned that sterling could fall further in the run-up to the referendum.
"Since the middle of November, the pound has been under sustained pressure, falling more sharply than at any time since the financial crisis," they wrote. "This has happened despite a relatively steady economic backdrop and, in our view, has been driven by worries attached to the forthcoming referendum.
"With the polls likely to continue to point to a very close contest and an uncertain outcome, this event-induced weakness could have further to go over the coming months."