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6 months ago
UPDATE 1-Pound gains ground as Lords launch Brexit debate
February 20, 2017 / 4:42 PM / 6 months ago

UPDATE 1-Pound gains ground as Lords launch Brexit debate

* 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 (Updates story, adds fresh quote)

By Ritvik Carvalho

LONDON, Feb 20 (Reuters) - The pound rose against most major currencies on Monday, snapping a three-day fall versus the euro at the start of another week likely to be dominated by questions about how Britain will leave the EU and the impact of Brexit on the economy.

The upper house of parliament, known as the House of Lords, has begun debating the bill which will pave the way for the formal start of talks on how Britain will leave the European Union.

Opposition and independent members of the Lords are seeking amendments to force the government to give more regular updates on the divorce talks and to secure guarantees for the rights of EU citizens living in Britain.

The pound was enjoying its best day since the start of the month, up 0.5 percent against the dollar at $1.2472 and 0.3 percent higher at 85.16 pence per euro after three days in the red.

"I think this is a bit of a correction after what was a pretty negative week last week in terms of UK data," said ING FX strategist Viraj Patel, referring to figures last week that showed UK consumer confidence, especially, was stumbling.

There was more mixed data on Monday. Asking prices for UK homes saw the smallest February rise since 2009, online property site Rightmove said.

Meanwhile British manufacturers saw orders grow at the strongest pace in two years, but the fall in the pound is making them push up their prices sharply and is not having any obvious benefit for exporters.

The pound, which was hammered after June's Brexit vote, has drifted lower against the dollar since mid-January, when Prime Minister Theresa May outlined her Brexit plan.

But it has climbed 4 percent against the euro during that time, as the single currency faced its own strains from political uncertainty in France, the Netherlands, Greece and Italy.

On Tuesday, the head of the Bank of England and its chief economist will be questioned by a parliamentary committee, while on Wednesday the UK statistics office will publish a revised reading of fourth quarter GDP figures.

The pound was up 0.4-0.6 percent against the Swiss franc and Japanese yen.

Sterling volatility gauges, which give traders the options to bet on large swings in the pound, remained subdued, having fallen in recent weeks, suggesting markets expect little drama when Britain triggers Article 50 of the EU's Lisbon Treaty to launch a two-year withdrawal period.

Speaking in Estonia, Brexit minister David Davis said the end of March remained the likely timing for the move, while May's spokesperson said there would be no U-turns once the exit process started.

Additional reporting by Marc Jones; Editing by Catherine Evans

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