UPDATE 1-Pound hovers around $1.29 after Conservative lead dwindles

Elizabeth Howcroft

* Graphic: World FX rates in 2019 http://tmsnrt.rs/2egbfVh

* Graphic: Trade-weighted sterling since Brexit vote http://tmsnrt.rs/2hwV9Hv (Updates prices, adds outlook)

LONDON, Nov 27 (Reuters) - Sterling was slightly higher on Wednesday, recovering from early losses following the third poll in a row that showed a dwindling Conservative lead before Britain's Dec. 12 general election.

The pound initially fell as much as 0.3% in early London trading after YouGov data released on Tuesday showed the Conservative party's lead over Labour narrowing to 11 points.

The pound may also have been weakened by reports of a surge in under-35s registering to vote before the deadline at midnight last night, since young people are less likely to support the Conservatives.

The pound fell as much as 0.3% against the dollar, to a low of $1.2827 in early London trading, before recovering to trade around $1.2889. Against the euro, the pound was up around 0.3% at 85.41 pence.

"So far, the market has been relatively complacent when it comes to the risks ahead," said Thu Lan Nguyen, FX strategist at Commerzbank. "Yes, the Tories still have the lead but they're certainly not gaining."

The surge in young voter registrations contributed to Wednesday's pressure on the pound, Nguyen said, but that was a temporary development. She did not expect the pound to start depreciating significantly in the run-up to the election.

"The focus will be increasingly on the polls now," she said. "Any surprise or any big move in any kind of direction, I think, will certainly become bigger the closer the elections are."

YouGov will release seat-by-seat predictions of the election outcome at 2200 GMT. The multilevel regression and post-stratification model accurately predicted the 2017 hung parliament, so it will be closely watched.

"Anything other than a prediction of a significant Conservative majority would be GBP-negative from current pricing," Adam Cole, chief currency strategist at RBC Capital Markets, wrote in a note to clients.

Although polling is generally accepted to be a poor indicator of voting outcomes, analysts say it is becoming more prescient as the election gets closer.

Markets are not enthused by the outlook for the pound beyond the election.

Prime Minister Boris Johnson says a Conservative win would mean quitting the European Union with a deal on Jan. 31, leaving just 11 months to negotiate a free trade deal with the EU or face damaging World Trade Organisation tariffs.

Meanwhile, Labour leader Jeremy Corbyn is promising to nationalise vast swathes of the UK economy.

While Conservatives are campaigning to "get Brexit done", Labour pledges a second referendum and the Liberal Democrats want to scrap Brexit without a referendum.

More British people think of themselves as 'Leavers' and 'Remainers' than as backers of a particular political party, a YouGov poll found, meaning that the politicians' stances on Brexit will be key.

Pound options suggest a perceived risk of depreciation. The implied volatility premium -- which dealers charge to hedge the risk of the pound falling -- has grown. (Reporting by Elizabeth Howcroft, editing by Larry King, William Maclean)