* Graphic: World FX rates in 2020 http://tmsnrt.rs/2egbfVh
* Graphic: Trade-weighted sterling since Brexit vote http://tmsnrt.rs/2hwV9Hv
(Updates prices)
By Lawrence White
LONDON, Nov 26 (Reuters) - Sterling held near a three-month
high on Thursday as U.S. dollar weakness offset some of the
uncertainty about the outcome of Brexit talks.
Traders are looking for progress on a trade deal between
Britain and the European Union. A successful deal is priced in,
but fears persist that the discussions could break down.
The head of the EU executive, the Commission, reported
"genuine progress" on Wednesday but said the risk of Britain
leaving the bloc without a deal on Dec. 31 remained.
Sterling, in common with British stocks, has largely
shrugged off finance minister Rishi Sunak's unprecedented
spending plans announced on Wednesday, as Britain looks to
borrow about 400 billion pounds ($535 billion) to pay for the
COVID-19 hit to the economy.
Sunak warned on Thursday that borrowing was not forecast to
fall fast enough to be sustainable, the closest he has come to
acknowledging that taxes will need to rise once the pandemic is
over.
He also said he was confident a trade deal with the EU could
be struck.
With just five weeks left until the United Kingdom exits the
bloc, both sides are trying to reach a trade deal that would
avoid a tumultuous finale to the Brexit crisis.
"Brexit uncertainty is a big driver behind the pound at the
moment. Resolution on that would have a much bigger impact, for
better or worse, than events like the Chancellor's speech
yesterday," said Mimi Rushton, co-head of global FX sales at
Barclays.
"There is a broader theme around dollar softness at the
moment, the month-end signal is for dollar-selling and some of
that has been brought forward by Thanksgiving in the U.S.," she
said.
The pound was down 0.22% at $1.3354 in early London
trading after hitting an early September high of $1.3399 in
Asian trading. It slid slightly against the euro to 89.1 pence
.
With a lack of major scheduled news on Thursday, sterling
traders said they would be watching for any official or
unofficial news on the Brexit talks, with negative signals
likely driving bigger price swings because a positive outcome is
expected.
($1 = 0.7481 pounds)
(Reporting By Lawrence White; Editing by Saikat
Chatterjee/Barbara Lewis/Pravin Char)
Barclays (BARC)