* 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 John Geddie
LONDON, Feb 8 The British pound steadied around
$1.25 on Wednesday after a series of swings a day earlier driven
by competing signals on the outlook for growth, interest rates
and Britain's withdrawal from the European Union.
Kristin Forbes, an external member of the BoE's Monetary
Policy Committee, said in remarks published on Tuesday that the
Bank should raise interest rates soon if British economic growth
remains solid and inflation continues to accelerate.
The BoE's regional agents report due Wednesday may give some
further insight into Forbes' thinking. Policymaker Jon Cunliffe,
who has previously said the fall in the pound on the Brexit vote
made rate decisions trickier, is due to speak at 1300 GMT.
At its meeting last week, the BoE voted unanimously 9-0 to
keep rates on hold at a record low of 0.25 percent but raised
its 2017 growth forecasts further while declining to do the same
with its inflation outlook.
"The BoE is unlikely to raise rates soon, but it could
become more likely later this year if growth holds up, inflation
expectations continue to rise, and wage growth proves stronger
than expected which would offer more support for the pound,"
said Lee Hardman, a currency analyst at Bank of Tokyo-Mitsubishi
The pound was up 0.2 percent against the euro and
little changed against the greenback at $1.2496 on
Wednesday, having bounced back strongly from a two-week low of
$1.2347 hit on Tuesday.
After that wild ride, three-month implied volatility -
options contracts that allow traders to bet or hedge against
swings in the currency - rose to their highest level since
Strategists at Credit Agricole warned that the pound "will
need to be careful not to get too far ahead of itself" with
investors waiting for the outcome of the final vote in
parliament on Article 50 later on Wednesday, before the
legislation passes to the upper chamber for approval.
Britain will not seek further talks with the European Union
if parliament rejects the exit deal it reaches, the government
said on Tuesday, as ministers pushed back attempts to give
lawmakers more say on the terms of the final agreement.
The closest vote to date saw seven Conservative lawmakers
defy the wishes of their leader and join forces with rival
parties to demand a more meaningful vote on the exit terms, but
the government won by 326 votes to 293.
In a further risk for the currency, which some banks
including Goldman Sachs have said could fall another 10 percent
this year, analysts pointed to polls showing Brexit had boosted
support for Scottish independence.
A majority of Scots backed staying in the EU, and the
Scottish National Party (SNP), the biggest party in Scotland's
parliament, has said there should be another independence vote
if its views on Brexit are rejected.
Scotland's devolved parliament rejected May's plans for how
to exit the EU in a symbolic, non-binding vote on Tuesday, a
demonstration of the divisions between London and Scotland when
it comes to Brexit.
(Editing by Andrew Heavens)