* Graphic: sterling and gilt yields bit.ly/2dgAXn1
* Graphic: World FX rates in 2016 tmsnrt.rs/2egbfVh
By Abhinav Ramnarayan
LONDON, Dec 20 Sterling dipped close to
one-month lows against a broadly stronger dollar on Tuesday,
kept under pressure by uncertainty over the process by which
Britain will leave the European Union.
The pound fell 0.9 percent against the dollar on
Monday on the back of concerns over how UK businesses will
manage the exit from the EU, as well as what was perceived as a
rising risk of a second Scottish independence referendum.
British Prime Minister Theresa May said on Monday the
country could cover EU funding when it leaves the bloc, helping
to ease pressure on the pound, as worries over a "hard Brexit"
in which Britain loses access to the single market were
alleviated a touch.
Traders will be listening to what May has to say when she is
questioned by a parliamentary committee at 1400 GMT on her plans
They will also be watching Scottish First Minister Nicola
Sturgeon, who is due to lay out plans for Scotland to keep
closer ties to the EU after the split.
Sterling edged down 0.1 percent to $1.2379 in early trades,
leaving it close to one month lows of $1.2355 touched the
It was flat against the euro at 83.90 pence,
close to a five-month high of 83.05 pence touched earlier in the
"Brexit is still the major driver in sterling, so May's
comments today are a factor and there's also a bit of a Scottish
flavour to the day," Rabobank currency strategist Jane Foley
The losses were contained after May said on Monday the
country could cover EU funding when it leaves the bloc.
Analysts were not expecting the prime minister to add
significantly to those comments during her appearance before
House of Commons Liaison Committee but warned that any surprises
had the power to move markets.
"Her comments have the potential to be market-moving for the
pound, which remains very sensitive to Brexit developments,"
MUFG analysts said in a note.
Sturgeon is expected to announce proposals for how Scotland
can remain in the European Union's single market after Britain
leaves the bloc.
"It hasn't gained much attention so far, and it is true it
is difficult to have a different deal for Scotland and the rest
of Britain, but May has said she will listen to what Sturgeon
has to say," said Foley.
Brexit has fed concerns over the prospect of another
independence referendum in Scotland, which strongly backed EU
membership in June's Brexit vote.
(Editing by Alison Williams)