* 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 comment)
By Ritvik Carvalho
LONDON, April 13 Sterling hit a six-week high
against the euro on Thursday as jitters ahead of the first round
of the French presidential election and a week of upbeat data in
the UK gave the British currency some respite from Brexit
The euro lost ground versus sterling this week over the rise
of Jean-Luc Melenchon, a far-left candidate in the French
presidential race, while steady inflation readings and
forecast-beating wage growth numbers gave the pound a lift.
Sterling was up 0.2 percent at 84.87 pence per euro, earlier
touching 84.76 pence, its highest level since Feb. 27.
"Obviously the French political risk concerns are quite
large," said Alvin Tan, currency strategist with Societe
"If we continue to see Melenchon improving his position in
the polls into the first round, it will weaken the euro and that
will weaken euro/sterling."
Centrist Emmanuel Macron and far-right leader Marine Le Pen
are still frontrunners in the French race, but Melenchon, who
for most of the campaign has been dismissed as a distant
no-hoper, has surged into the top four and lies just a few
percentage points behind the leaders. A four-way contest in the
election could heighten uncertainty over its result for
investors who have grown wary of polls.
Set for a fourth successive daily gain versus the dollar in
early London trade, the pound lost momentum as the greenback
recovered from a dip following U.S. President Donald Trump's
comments on its strength.
It last traded at $1.2522, down 0.2 percent on the
day, but still up 1 percent for the week.
The pound's fall of nearly 20 percent since last year's
Brexit vote has benefited exporters, but driven up domestic
inflation, thus squeezing consumers' spending power - a concern
for investors who saw robust consumption as a factor propping up
Britain's economy after the EU referendum.
Consumer prices in Britain increased in March by 2.3 percent
compared with a year earlier - above the Bank of England's
target - while earnings including bonuses rose by an annual 2.3
percent in the three months to February.
British manufacturers reported the fastest export growth in
more than two years in early 2017 and the services sector also
recovered to rack up its strongest sales growth since last
June's Brexit vote, a business survey showed on Thursday.
"A weak sterling over the past few months will continue to
fuel inflationary pressure ... So high inflation at a time when
wage growth is stagnant doesn't bode well for UK consumers over
the long-term horizon," said Piotr Matys, currency strategist
(Reporting by Ritvik Carvalho; Editing by Alison Williams)