April 3, 2018 / 8:12 AM / 3 months ago

Pound gains before manufacturing survey data

* Graphic: World FX rates in 2018 tmsnrt.rs/2egbfVh

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

LONDON, April 3 (Reuters) - Sterling gained on Tuesday as the dollar sold off and traders awaited UK manufacturing survey data for clues as to whether the British economy is building momentum to fuel expectations of an interest rate rise next month.

The pound has rallied since Britain last month secured a transition deal with the European Union for its exit from the bloc, and the Bank of England took on a hawkish tilt.

But some analysts say it is mainly the broad weakness of the dollar - linked to a trade dispute between the U.S. and China - that is keeping sterling above $1.40.

By 0850 sterling rose 0.2 percent to $1.4081 as investors awaited the Purchasing Managers’ Index survey for the manufacturing sector in March due at 0930 GMT.

Analysts polled by Reuters expect the survey to come in at 54.7, down from 55.2 in February.

“The poor weather (that straddled late February/early March) may make the data more than usually difficult to interpret,” said Adam Cole, chief currencies strategist at RBC.

“(So) ...even a significantly softer release today would be unlikely to call into question the May rate hike that markets remain almost fully priced for.”

The BoE has said its monetary outlook remains dependent on smooth negotiations with the EU over Brexit and Britain’s economic performance.

Against the euro, sterling traded flat at 87.54 pence per euro. (Reporting by Tom Finn; editing by John Stonestreet)

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