January 16, 2018 / 9:14 AM / 4 months ago

Sterling steadies ahead of UK inflation data

* 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, Jan 16 (Reuters) - The British pound paused on Tuesday after a recent rally against the dollar, as traders waited for an update on British inflation that is expected to show price rises falling slightly from a near-six-year high.

Sterling has jumped in recent days, trading up into its highest levels since the British vote to leave the European Union in June 2016 against the dollar. Hopes that some members of the EU are ready to allow Britain to remain closer to the trading bloc after its departure have helped the pound trade higher, as has broad dollar weakness.

The pound was flat at $1.3785 by 0909 GMT, with traders focused on the consumer price inflation data released at 0930 GMT. Analysts forecast that will show a rise of 3 percent in December on a year earlier, down slightly from a near six ear high of 3.1 percent in November.

“Inflation is likely to remain stickier than usual for the next couple of months as the January effect of higher rail fares also bleeds through into the numbers. It should then start to soften towards the end of Q1 assuming the pound stays at its current levels,” said Michael Hewson, London-based chief analyst at CMC Markets.

Against a broadly weaker euro, sterling edged up 0.2 percent to 88.77 pence. (Reporting by Tommy Wilkes; Editing by Jemima Kelly)

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