* 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 edged up on Monday,
extending its winning streak against the euro for a sixth
straight day after enjoying a boost from last week's
better-than-expected manufacturing and trade data.
The pound was up over 0.3 percent against the dollar
and steady against the euro which has been hit by
nerves around a pickup in political uncertainty in Europe and
the ongoing standoff in Greek bailout talks.
"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."
Investors will be watching the release of British inflation
and retail data this week to see how sentiment is holding up and
whether an expected weakness in December was temporary or the
start of a weakening trend for consumer spending ahead.
"We expect to see rising CPI and weaker retail sales,"
Kathleen Brooks, research director at City Index said in a note.
"Overall, that could be a toxic mix for the pound, especially if
rising prices are seen to be already restraining consumption."
A number of forward-looking indicators of sentiment have
dipped in the past 10 days, stirring nerves among investors that
a weakening of growth predicted by many economists since the
vote to leave the EU last June is finally materialising.
But manufacturing output rose 2.1 percent in December, far
higher than the 0.5 percent rise forecast in a Reuters poll. And
compared with December 2015, it was up 4.0 percent, the
strongest increase since April 2014.
Sterling was trading at just over $1.25 at 0840 GMT and
around 85 pence to the euro, sticking to the levels that saw its
best week against the latter in over three months last week.
While the pound's moves since June show a preoccupation with
the UK vote to exit the European Union, MUFG's Hardman doesn't
buy speculation that triggering Article 50 to begin the formal
process could justify another leg lower in the currency.
"It's kind of a formality," he said. "It's pretty obvious
that the UK is going to be leaving the EU and it's just a matter
of when those negotiations start."
(Editing by Toby Chopra)