June 9, 2020 / 8:31 AM / a month ago

Sterling falls below $1.27, also weakens versus euro

* Graphic: World FX rates in 2020 tmsnrt.rs/2egbfVh

* Graphic: Trade-weighted sterling since Brexit vote tmsnrt.rs/2hwV9Hv

By Elizabeth Howcroft

LONDON, June 9 (Reuters) - The pound edged back below $1.27 and also fell against the euro on Tuesday, driven by shifts in global risk appetite, as well as domestic concerns over Brexit and the economy re-opening.

The pound has risen 2.8% against the dollar this month as several countries emerge from lockdowns, weakening demand for the safe-haven U.S. currency.

But cable’s eight-day winning streak was set to break as the dollar pushed higher against a basket of currencies on Tuesday.

“Sterling is highly sensitive to these changes in risk sentiment - it’s a more risky currency that it was a couple of months ago and some years ago,” said Ulrich Leuchtmann, head of FX and commodity research at Commerzbank.

The pound hit a new three-month high of $1.2757 in overnight trading, before falling to $1.2675 by 1000 GMT, down 0.4% on the day.

Against the euro, the pound’s losses were smaller, down around 0.2% at 88.90 pence.

Investors are waiting for more information about the proposed re-opening of the UK economy.

Britain introduced a 14-day quarantine for international arrivals on Monday. Airlines want this move scrapped, as they say it could lead to more job losses just when they were hoping to launch a recovery from COVID-19.

So-called “air bridges” - corridors which allow unrestricted movement between Britain and some other countries - will open from June 29, a UK tourism lobby group said on Tuesday, citing assurances it said it received from senior government sources.

Uncertainty about Brexit is also a cause for concern for sterling investors, said Commerzbank’s Leuchtmann.

The fourth round of trade talks between the UK and EU finished with both sides saying little progress had been made. The UK has until the end of July to request an extension to the transition period which is due to end after December 2020. (Editing by Kirsten Donovan)

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