December 20, 2018 / 9:12 AM / 8 months ago

Sterling rallies vs dollar ahead of BoE meeting

* Graphic: World FX rates in 2018

* Graphic: Trade-weighted sterling since Brexit vote

LONDON, Dec 20 (Reuters) - Sterling gained nearly half a percent against a broadly weakened dollar on Thursday, as traders prepared for British retail sales data and the Bank of England’s interest rate decision.

Analysts put most of the pound’s buoyancy down to dollar weakness, with the U.S. currency struggling after the Federal Reserve struck a more dovish tone on monetary policy than in previous months.

Worries about Prime Minister Theresa May’s ability to win parliamentary approval for her Brexit deal in January continue to weigh on the pound, and will almost certainly keep the Bank of England from changing its monetary stance.

The BoE rate decision is due at 1200 GMT and the retail sales numbers at 0930 GMT. According to a Reuters poll of analysts, retail sales are expected to have grown 0.3 percent month-on-month in November.

“With Britain facing unprecedented economic uncertainty as Brexit approaches, the last thing the Bank would want to do is add to people’s worries,” Marshall Gittler, chief strategist at ACLS Global.

“In any case, following yesterday’s inflation data, which showed inflation slowing as expected, it would be hard for them to take a more hawkish stance...I expect them to be relatively dovish in the face of such uncertainty, which may cause the pound to weaken even further.” (Reporting by Tommy Wilkes Editing by Keith Weir)

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