* 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
LONDON, March 27 Sterling rose almost 1 percent
to an eight-week high against the dollar on Monday, gaining with
other major currencies after the failure of a Republican
healthcare bill weakened faith in U.S. President Donald Trump's
other campaign promises.
At the start of a week set to include Britain's formal
request to leave the European Union, the pound gained 0.8
percent compared with Friday's close in New York, reaching
$1.2615, its highest since Feb. 2.
It also inched up 0.1 percent to 86.50 pence per euro
, a squeeze on record high bets lodged against
sterling in recent weeks helping it outperform other major
developed world currencies with the exception of the yen.
The moves take it to the top of a $1.20-$1.27 range it has
held since October.
"Really it has been a dollar story today, but just the
weight of the short positioning and its relative illiquidity
have made sterling the outperformer along with the yen," said
Nomura analyst Jordan Rochester.
"$1.25 to $1.27 is the sell zone at the moment (for the
pound). Whenever you get up to these ranges, you have selling
demand come back in and we have already seen that this
Sterling has been rising steadily since a Bank of England
meeting on March 16 that saw a number of its members swinging
towards concern over rising prices and its next move being a
rise in interest rates to quell consumer inflation expectations.
But official U.S. futures market data on Friday showed net
bets on the pound rising even further in the week to last
Tuesday, a measure of the deeper concern among investors about
Britain's path out of the EU over the next two years.
A number of major banks have predicted the pound will fall
below $1.20 in the period of political jousting sparked by the
launch of formal "Article 50" negotiations on the terms of a
divorce expected to see it leave the European single market.
"Our near term bearishness towards the pound has been
challenged by the constructive BoE message on rates," said Kamal
Sharma, a strategist with Bank of America Merrill Lynch in
"But we don't think Article 50 is the last shoe to drop on
sterling bearishness. From Wednesday, the narrative is out of
(Prime Minister Theresa) May's hands and with the EU. That may
put more pressure on the pound again."
(Reporting by Patrick Graham and Jemima Kelly, editing by Ed