* Graphic: sterling and gilt yields bit.ly/2dgAXn1
* Graphic: World FX rates in 2017 tmsnrt.rs/2egbfVh
* Graphic: Trade-weighted sterling since Brexit vote tmsnrt.rs/2hwV9Hv
By Yumna Mohamed
LONDON, Feb 13 Sterling rose against the euro
for a sixth straight day on Monday, chalking up its best run in
over four months as the euro zone currency struggled to shake
off French political worries and Greek debt strains.
The pound still had the tailwind of last week's
better-than-expected manufacturing and trade data and figures
this week will show how inflation and confidence among Britain's
shoppers are holding up.
Sterling nudged back up to $1.25 against the dollar
but climbed a more forceful 0.5 percent against the euro to take
it to a two-week high of 84.80 pence and putting the
start of the year's 84.50 pence marker in its sights.
"We're looking for the pound to trade relatively well in the
near term with upside against the euro in particular," said MUFG
currency economist Lee Hardman.
"There's a lot of political risk coming up in Europe with
elections in France and later in the Netherlands, Germany and
Italy and after the unexpected results from Brexit and the U.S.
elections last year, the market has learned to become a little
more nervous ahead of those events."
Greek debt worries have also resurfaced for the euro. The
head of the International Monetary Fund Christine Lagarde told
Reuters on Monday the Fund would do its best to agree on a
bailout but could not compromise its principles.
UK-focused investors meanwhile will be watching British
inflation data on Tuesday and retail sales figures on Thursday
following some mixed signals in recent weeks.
A number of forward-looking indicators of sentiment have
dipped in the past 10 days, stirring nerves that a weakening of
growth predicted by many economists since the vote to leave the
EU last June is finally materialising.
But British manufacturing output rose 2.1 percent in
December, figures showed last week, far higher than the 0.5
percent rise forecast. And compared with December 2015, it was
up 4.0 percent, the strongest increase since April 2014.
"We expect to see rising CPI and weaker retail sales,"
Kathleen Brooks, research director at City Index, said in a
"Overall, that could be a toxic mix for the pound,
especially if rising prices are seen to be already restraining
Reuters polls are forecasting that British factory input
prices also released on Tuesday, will show a
searing 18.3 percent year-on-year increase In January.
That would be the highest level since 2008 - and could spell
trouble ahead for British manufacturing. As the following
graphic shows - bit.ly/2lHPptw - factory input prices
have tended to hurt manufacturing investment in recent years.
Over the last month though, sterling has risen over 4
percent against the euro, the dollar and the yen
making it one of the top FX performers of 2017 so far.
"We were heavily underweight (on sterling) but we have now
eased that to a neutral stance," said Lombard Odier's Chief
Investment Strategist Salman Ahmed.
(Additional reporting by Marc Jones; editing by Andrew Roche)