* Graphic: sterling and gilt yields bit.ly/2dgAXn1
* Graphic: World FX rates in 2016 tmsnrt.rs/2egbfVh
By Abhinav Ramnarayan
LONDON, Dec 20 Sterling hit one-month lows
against a broadly stronger dollar on Tuesday as Scotland's
premier said she was willing to push for independence from the
rest of the UK in order to maintain access to Europe's single
Scottish First Minister Nicola Sturgeon said her preference
in the Brexit aftermath was for the whole of the UK to stay in
the single market, which trades goods and services tariff-free
across 28 countries.
A second option proposes a single market membership
carve-out for Scotland from a UK outside the EU. The third
option is independence from the rest of the UK.
"Sterling has been under pressure because of these issues
with the potential Scottish referendum, after (Sturgeon) set out
red lines on Brexit scenarios and talked about continued access
to the single market," said Societe Generale currency strategist
The pound hit a one-month low of $1.2313 before
edging up to around $1.2350 by 1555 GMT, still down 0.3 percent
on the day. Sterling also fell on Monday, losing 0.9 percent on
the back of concerns over how UK businesses will manage the exit
from the EU.
British Prime Minister Theresa May told a committee of
lawmakers on Tuesday that she did not think there was a need for
the Scottish government to hold another referendum. If Scotland
were to become independent, she said, it would no longer be a
member of the EU.
May told the committee that the needs of businesses adapting
to a new relationship with the European Union would be addressed
once a deal for Brexit has been struck.
But BNP Paribas strategist Sam Lynton-Brown said sterling's
fall on Tuesday had little to do with any of May's comments.
"I don't feel (the move) is on anything fundamental. It is
much more a function of the stregnthening dollar and some
adjustments by traders to their positions towards the year-end,"
The dollar climbed to a 14-year high on Tuesday after
Federal Reserve Chair Janet Yellen's comments about the labour
market reinforced the notion of a faster pace of U.S. interest
rate hikes next year than had been expected.
Sterling also fell 0.4 percent against the single currency
to 0.8419 pence by 1545 GMT.
(Editing by Alison Williams)