* Graphic: sterling and gilt yields bit.ly/2dgAXn1
* Graphic: World FX rates in 2016 tmsnrt.rs/2egbfVh
(Updates after moves on OPEC deal)
By Patrick Graham
LONDON, Nov 30 Sterling surged back to an
11-week high against the euro in late trade in London on
Wednesday, racking up its best month since January 2009 as a
deal to cut OPEC oil output weakened the single currency against
The pound had suffered earlier, with dealers citing
month-end rebalancing by investors after what was also its
strongest performance against the dollar since April.
But an almost 1 percent loss for the euro after the
confirmation of OPEC's first curbs on output in eight years put
it back on track, rising 0.7 percent to 84.56 pence per euro -
its strongest since early September.
"The most interesting stuff that is going on at the moment
is OPEC and the influence that it is having on fixed income,"
said Citi strategist Josh O'Byrne.
"The market is trading on the perceived fiscal impulse from
the U.S., and the fact that we have higher yields everywhere.
That is having an impact on currencies that have low yields, low
inflation and sterling is really on the sidelines in
The pound has gained 1.7 percent against the dollar in
November, breaking a losing run that dates back to April and the
lead-up to Britain's surprise vote to leave the European Union
on June 23.
Against the euro, it has gained almost 6 percent. But that
all comes at the end of by far its weakest year since the 2008
financial crisis, the product of uncertainty before the
referendum and expectations that sterling will continue to fall
as talks on leaving the trading bloc begin next year.
Dutch bank ING was the latest to forecast sterling to fall
to $1.15 in the early part of next year, given the lack of
clarity over Britain's negotiating strategy and the risk of a
poor outcome that damages the economy for the long run.
"The broader risks to GBP continue to lie to the downside,"
the bank's currency strategists said in their 2017 outlook on
"Sterling is likely to bear the brunt of this lack of
political transparency, while further uncertainty over the UK's
eventual degree of access to the EU single market could see the
emergence of new unaccounted risks."
A regular survey by market research firm GfK on Wednesday
showed confidence among British consumers fell in November to
its lowest level since just after the vote in June.
Investors were also digesting the need for more capital at
British bank RBS after it failed the Bank of England's latest
round of stress tests.
(Editing by Ruth Pitchford)