March 14, 2018 / 10:08 AM / 9 months ago

Sterling hits a 3-week high as dollar struggles

* Graphic: World FX rates in 2018

* Graphic: Trade-weighted sterling since Brexit vote

LONDON, (Reuters) - Sterling hit a three-week high on Wednesday, buoyed by the dollar’s spreading weakness, as the sudden dismissal of U.S. Secretary of State Rex Tillerson reverberated through markets.

But traders were wary of pushing sterling above the $1.40 line on renewed concerns about the state of Brexit talks after the EU rejected some British proposals for a trade deal last week.

Sterling was trading broadly flat on the day at $1.3950 . It hit a high of $1.3996 in early trades, its highest since Feb. 27.

It hit $1.4346 on Jan. 25, its highest level against the U.S. dollar since Britain voted to leave the European Union in June 2016.

Though it has pulled back modestly from those highs, it remains near the top of its trading range of $1.20 to $1.43, buoyed by hopes a Brexit transition deal will be eventually be struck and a generally weaker U.S. currency.

Against the euro, a better proxy for Brexit related sentiment, the British currency was broadly flat on the day at at 88.65 pence.

Britain’s sluggish economy is heading for more weak growth over the next five years, according to official forecasts announced by finance minister Philip Hammond on Tuesday as the country heads for Brexit.

Reporting by Saikat Chatterjee Editing by Raissa Kasolowsky

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