* Graphic: sterling and gilt yields bit.ly/2dgAXn1
* Graphic: World FX rates in 2016 tmsnrt.rs/2egbfVh
By Jemima Kelly
LONDON, Nov 29 Sterling inched up against the
dollar on Tuesday, staying in the broad $1.23-$1.26 range it has
traded in for the past two weeks, with investors waiting for
fresh cues on how Britain will leave the European Union.
The pound got a small boost on Tuesday after data showed
lending to Britons expanded last month at the fastest annual
pace in 11 years, while mortgage approvals were stronger than
expected, bolstering the picture of resilient consumer demand
after June's Brexit vote.
Against a broadly weaker euro, sterling climbed 0.7 percent
to trade back below 85 pence, having just recorded
its longest run of weekly gains since early 2015 against the
Sterling is still almost 10 percent weaker against the euro
compared with before Britain's vote to exit the European Union.
But it has climbed 5 percent since the start of November, as the
euro has weakened on uncertainty over an Italian constitutional
referendum on Sunday and French and German elections next year.
"There remains concern about the Italian referendum and I
think that's likely to continue to dominate activity in Europe
for the next few days - that's probably why sterling is stronger
against the euro," said Societe Generale currency strategist
The way in which Britain exits the EU has dominated
sterling's direction since the vote to leave in June. With few
new clear developments in recent weeks, analysts said the
currency was treading water.
The British government denied on Tuesday that a document
photographed in the hands of an official from the ruling
Conservative party - which said the strategy for Brexit talks
was to "have cake and eat it" - accurately reflected its plans
for forthcoming EU divorce negotiations.
The handwritten note also said Britain would be unlikely to
stay in the European single market, and that the government was
"loath" to bring in "transitional" arrangements.
It suggested Britain could seek a "Canada Plus" deal - a
reference to a trade deal agreed between Canada and the EU last
month after seven years of talks.
Against the dollar, sterling climbed 0.4 percent to $1.2458
Data from the Commodity Futures Trading Commission released
on Monday showed speculators' bets against sterling fell for a
second straight week, to the lowest since September.
"Sterling short positioning continued to fall last week,
mainly in the absence of any fresh selling triggers," wrote
Credit Agricole currency strategists in a research note.
"Given stable BoE (Bank of England) monetary policy
expectations, and as political uncertainty is unlikely to
increase in the short-term, the risk of additional position
squaring is likely to continue intact."
The BoE cut interest rates to a record low of 0.1 percent in
the aftermath of Brexit, and is expected to keep them there for
all of 2017.
(Editing by Tom Heneghan)