It would depend what exactly the sign said, and also whether there was an innocent explanation. But if it was done intending to cause racial hatred, yes it would be illegal. If it was done for some other reason, not necessarily.
On 15 May 2017, police were informed of a fake road sign depicting the silhouette of a Jewish man in a red warning triangle being put on a post in Stamford Hill, an area of London where many Jews live. Many people criticised it, but an artist later said it was part of a project in which he put silhouettes - others included an old lady with a shopping bag, and a cat - into road signs intending to warn motorists to take care.