September 4, 2018 / 8:33 AM / in 8 months

Sterling falls as doubts build over Brexit, BoE's Carney

* Graphic: World FX rates in 2018

* Graphic: Trade-weighted sterling since Brexit vote

LONDON, Sep 4 (Reuters) - The pound fell to a one-week low versus the dollar on Tuesday on rising doubt among investors about the progress of Brexit talks and the future leadership of the Bank of England.

Sterling fell sharply on Monday against the euro after European Union chief Brexit negotiator, Michel Barnier, and former foreign secretary Boris Johnson criticized Britain’s latest proposals for Brexit.

Sentiment was further sapped by manufacturing data underscoring weakness in the economy.

Investor’s attention on Tuesday, however, shifted to the question of whether Bank of England Governor Mark Carney will stay on at the helm of the central bank beyond the summer of next year.

Carney will testify to the Treasury select committee later on Tuesday and is expected to address speculation that he will agree to extend his tenure beyond a previously agreed departure date of next June.

“We take the view that the policy continuity that would ensue under Carney extending his term would be supportive for sterling as it would reduce a source of policy uncertainty at a time when the currency is likely to be riddled with other Brexit-related uncertainties,” ING currency strategist Viraj Patel said.

Personnel changes at the helm of the BoE, however, is unlikely to be a game-changer for British markets at a time when the major driver for the economy, central bank policy and financial assets is Brexit, Patel said.

In August the BoE pushed interest rates above their financial crisis lows but signalled it was in no hurry to raise them further as Britain heads for Brexit next year with no clear plan for leaving the European Union.

At GMT 0820 the pound was down 0.4 percent against the dollar at $1.2825, it lowest since Aug 24. Against a broadly weak euro it traded flat at 90.13 pence.

Traders said they would scrutinize a survey of Britain’s construction sector due at GMT 0830 on Tuesday for signs of whether the economy is picking up after fairly sluggish 2018.

A purchasing managers’ index (PMI) for the construction sector was expected to show activity at 55 for August, according to analyst expectations, down marginally on the previous month. (Reporting by Tom Finn, Editing by Angus MacSwan)

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