* Graphic: World FX rates in 2020 http://tmsnrt.rs/2egbfVh
* Graphic: Trade-weighted sterling since Brexit vote http://tmsnrt.rs/2hwV9Hv
(Updates prices, adds further background and analyst comment)
By Ritvik Carvalho
LONDON, May 17 (Reuters) - Sterling held on to recent gains
against the dollar on Monday as Britain took a big step towards
reopening its economy, lifting a number of social restrictions
imposed to combat COVID-19.
Cafes, bars and restaurants reopened for indoor service and
a ban on international travel has also been lifted, among other
easing measures.
Sterling has gained against the dollar for two weeks
straight, and on Monday, consolidated near the $1.41 mark. It
traded 0.1% higher in afternoon deals in London, at $1.4119.
It was also 0.1% higher against the euro at 86.00 pence.
"It has been a well-telegraphed move, but major re-opening
in the UK today should continue to be welcomed by UK asset
markets and the pound," said ING strategists in a note to
clients.
However, there is growing concern about the B.1.617.2
variant of the coronavirus, which British scientific advisers
say will become dominant in the United Kingdom and is more
transmissible than a variant first identified in Kent, England.
"Despite threats from the Indian variant, the scheduled
re-opening will keep expectations of a summer UK recovery on
track and feed into the BoE's upbeat assessment of the UK
activity outlook."
Sterling's gains this year have been aided by a more hawkish
Bank of England (BoE), which has begun tapering asset purchases,
and by Britain's vaccination drive.
Analysts also say a combination of a stronger UK economic
rebound than expected and the belief that any Scottish
independence vote is a long way off makes the pound relatively
attractive.
Speculative positioning on the pound increased in the week
up to last Tuesday, CFTC data on Friday showed.
Businesses ramped up their search for new staff as pubs,
restaurants and other hospitality and travel firms got ready for
the lifting of restrictions in England, a survey showed.
But an exodus of foreign workers is aggravating a shortage
of candidates, with more than 10 jobs on offer for every
job-seeker in some cities, according to the survey by job search
website Adzuna.
Further signs of Britain's economic health will seen later
this week in a busy data calendar. Labour market data is due on
Tuesday, inflation on Wednesday, followed by retail sales data
and purchasing managers' indexes on Friday.
"With an optimistic BoE and new members incoming, this data
potentially move the needle for the UK front end and by
extension sterling," CitiFX analysts Ebrahim Rahbari and Calvin
Tse said in a note to clients.
(Reporting by Ritvik Carvalho; Editing by Kirsten Donovan and
Nick Macfie)