LONDON, Sept 6 (Reuters) - A narrow majority of institutional investors plan to keep their holdings of UK assets stable into early 2019 as Brexit negotiations approach a crunch phase, according to a quarterly survey by State Street Corporation.
In the eighth instalment of a survey that began in 2016, the proportion of investors who expected their holdings of UK bonds, stocks and alternatives to remain constant over the next six months remained at 55 percent, indicating the broader investor base is adopting a wait and see approach.
The so-called "Brexometer" index was conducted between late-July and late-August by State Street, which manages $2.7 trillion in assets globally. The respondents were 101 participants across hedge funds, real estate and private equity investors.
The survey also found that demand for holding UK assets was nearly 21 percent, its highest level in nearly two years. However, the proportion of investors looking to decrease their UK holdings also increased to 20 percent.
Media reports on Wednesday that the German and British governments had abandoned key Brexit demands, potentially easing the path for a divorce deal, sent the British currency rocketing higher against the euro and the dollar.
But subsequent news that German Chancellor Angela Merkel's government is preparing for all Brexit scenarios, including a no-deal outcome, prompted investors to take some profits.
A Reuters poll found that sterling will rise six percent in a year but a no-deal Brexit will push it lower. (Reporting by Saikat Chatterjee; editing by David Stamp)