* Graphic: World FX rates in 2020 http://tmsnrt.rs/2egbfVh
* Graphic: Trade-weighted sterling since Brexit vote http://tmsnrt.rs/2hwV9Hv
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By Joice Alves
LONDON, Sept 25(Reuters) - Sterling erased earlier gains in
a choppy session on Friday as investors hoped Britain's new
scaled-back job support scheme would be followed by other fiscal
measures but feared talks about a move to sub-zero rates could
The pound was down 0.4% at $1.2692 by 1508 GMT against a
dollar on course for its best week in six months. Cable
has fallen 5.1% so far in September, its worst monthly
performance since October 2016.
Versus the euro, sterling was up 0.1% at 91.53 pence
after hitting its best level in a week of 91.13 on
Thursday. This month, sterling is down 2.5% against the single
Jane Foley, head of FX strategy at Rabobank, said the
relationship with the euro is "perhaps a better reflection of
the movements in the pound" as a large part of cable's slip "is
still about the dollar's strength".
Analysts expect more steps to help the coronavirus-battered
British economy after Finance Minister Rishi Sunak announced a
new scheme to support jobs, but warned unemployment would still
Sterling's path largely depends on whether the government
will offer more stimulus or if sub-zero rates will be
implemented, analysts said.
"We've had some measures, which will stop the economy
falling off a cliff, but certainly it is quite possible that
these will not be enough to subdue calls that the UK Government
should do more in terms of fiscal support," Foley said.
If there is a reluctance to announce more fiscal measures,
the market will shift focus to the possibility of monetary
policy measures, Foley said.
Bank of England governor Andrew Bailey did not exclude the
possibility of negative rates, saying on Thursday that the bank
had not formed a view on the matter yet.
The looming risk of a no-deal Brexit and new lockdown
measures are also weighing on the pound.
Earlier this week, Prime Minister Boris Johnson told Britons
to work from home where possible and ordered restaurants and
bars to close early. The new measures could last for six months,
But the biggest threat to sterling remains the risk of the
European Union and Britain failing to reach a trade agreement by
the end of a transition period in December, analysts say.
(Reporting by Joice Alves
Editing by Mark Heinrich and Tomasz Janowski and Kirsten