* Dollar hits two-month high vs sterling to $1.2201
* Euro hits 8-day low vs dollar of $1.0372
* Higher expected U.S. growth boosts dollar
* Dollar on track to gain 4.7 pct for year
By Sam Forgione
NEW YORK, Dec 28 The U.S. dollar hit its highest
level in two months against the sterling on Wednesday on
concerns over next year's Brexit negotiations, while
expectations of higher U.S. economic growth also underpinned the
Sterling fell as much as 0.5 percent to a session low of
$1.2201, its weakest since Oct. 31. Britain faces
uncertainty next year over Brexit negotiations. In October,
Prime Minister Theresa May said she would trigger the process to
leave the European Union by the end of March.
Expectations that U.S. President-elect Donald Trump's
incoming administration would boost U.S. growth through fiscal
stimulus also continued to bolster the dollar.
Trump plans to make an announcement related to the economy
between 4 p.m. and 5 p.m. ET (2100 to 2200 GMT), incoming White
House spokesman Sean Spicer told reporters on a conference call.
The dollar index, which measures the greenback against a
basket of six major rivals, has gained 4.7 percent this year.
All those gains have come after the Nov. 8 U.S. election.
The Federal Reserve's projections, released on Dec. 14, of
three rate hikes for 2017 from the two foreseen in September
have also contributed to the dollar's recent gains.
"This is just a continuation of the trend" of dollar
strength, said Axel Merk, president and chief investment officer
of Palo Alto, California-based Merk Investments. Merk, who noted
that trading volumes were thin with many traders on vacation,
said the upcoming Brexit talks did not bode well for sterling.
The euro fell as much as 0.8 percent against the dollar to
an eight-day low of $1.0372. Against the Japanese
currency, the dollar was last down 0.15 percent at 117.21 yen
, slipping from an earlier six-day high of 117.81.
The dollar index was last up 0.28 percent at 103.310
after hitting a session high of 103.630 and flirting with a
14-year peak of 103.650 struck on Dec. 20.
Some analysts said another source of euro weakness was the
rise in the European Central Bank's estimates of how much
additional capital will be needed to prop up Italian bank Monte
dei Paschi di Siena.
"Our case is that there's probably a bit more room for (the
dollar) to run," said Dominic Bunning, a strategist with HSBC in
The euro remained weak against the dollar even though
contracts to buy previously owned U.S. homes fell in November to
the lowest in nearly a year, according to National Association
of Realtors data.
(Reporting by Sam Forgione; Additional reporting by Patrick
Graham in London; Editing by David Gregorio and Richard Chang)