* Pound hits 2-1/2 month high vs dollar
* Forecast-beating PMIs support sterling
* Graphic: World FX rates in 2020 http://tmsnrt.rs/2egbfVh
* Graphic: Trade-weighted sterling since Brexit vote http://tmsnrt.rs/2hwV9Hv
(Adds details after PMI release, chart)
LONDON, Nov 23 (Reuters) - Sterling rallied on Monday as
more positive news about a potential COVID-19 vaccine propelled
investors to buy riskier currencies and offset concerns about
whether Britain and the European Union can clinch a Brexit trade
deal.
London and Brussels this week continue their negotiations to
agree a deal on their future trading relationship, though time
is now running very short as Britain's post-Brexit transition
period ends in fewer than six weeks.
Without an agreement Britain would revert to trading with
the EU on World Trade Organisation rules, an outcome both sides
believe would prove highly disruptive for their economies.
Most investors believe a deal will be clinched, even if it
is a bare-bones one that leaves some trade discussions for
later.
Such optimism has kept sterling supported and news on Monday
that Britain's AstraZeneca vaccine for the novel coronavirus
could be around 90% effective without any serious side effects
added to the positive mood and pushed the pound to 2-1/2 months
highs.
The British currency rose 0.7% to as high as $1.3382
, while against the euro it rose more than half a
percent to 88.75 pence, a near two-week high.
"The FX market is seeing it as a GBP positive sign that the
negotiations are being continued in December," said Ulrich
Leuchtmann, an FX strategist at Commerzbank, while adding that
an extension to the Dec. 31 transition period end-date is now
likely as the two sides run out of time to forge a deal.
The widely-watched flash purchasing managers index
(PMI)surveys for November came in better than expected, with the
composite measure touching 47.4 against a forecast of 42.5.
However, any reading below 50 still represents a contraction,
and the latest lockdown measures are weighing on the economy.
In a busy week for the UK, Finance Minister Rishi Sunak will
unveil his spending review on Wednesday. He vowed over the
weekend that there would be no return to austerity, even as the
coronavirus crisis pushes Britain's debt further above 2
trillion pounds.
(Reporting by Tommy Wilkes
Editing by Gareth Jones)
Astrazeneca (AZN)
