Sterling could fall 15-20 percent if Britain leaves EU - Goldman

LONDON (Reuters) - Sterling could fall as much as 15-20 percent if Britain votes to leave the European Union, a scenario that could spook foreign investors and dry up the capital inflows needed to fund the country's current account deficit, Goldman Sachs said on Thursday.

"The UK's current account deficit would still be a source of vulnerability despite some recent improvement. An abrupt and total interruption to incoming capital flows in response to a 'Brexit' could see (sterling) decline by as much as 15-20 percent," the U.S. investment bank said in a client note.

That would be on a trade-weighted basis, implying a potential fall in sterling against the dollar to around $1.15-1.20 from $1.4565 currently and a rise in the euro to around 90-95 pence from 76 pence, it said.

Prime Minister David Cameron has promised to hold a referendum before the end of 2017 but a date this summer is increasingly expected.

(Reporting by Jamie McGeever, editing by Nigel Stephenson)