April 26, 2019 / 8:46 AM / 3 months ago

Sterling headed for worst week in a month as dragged-out Brexit weighs

* Graphic: World FX rates in 2019 tmsnrt.rs/2egbfVh

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

LONDON, April 26 (Reuters) - The pound on Friday was headed for its weakest week in a month, with a stronger dollar and growing concern about stagnant Brexit talks punishing the British currency.

Sterling - stuck around $1.29 - has struggled this week as lawmakers returned from an Easter recess with little sign of progress in Prime Minister Theresa May’s efforts to convince lawmakers to back her Brexit deal.

Britain’s departure date from the European Union has been pushed back until as late as the end of October, and sterling traders are concerned in the meantime about the impact on the economy and a renewed push for May to step down.

The protracted divorce is hurting the world’s fifth-largest economy and poor productivity is hindering growth, Goldman Sachs said.

Sterling edged 0.1 percent higher to $1.2901, its weakest since mid-February. Against the euro, the pound traded flat at 86.3 pence.

The dollar, which rose towards a two-year high against rivals as economic data points to a U.S. economy outperforming other countries, also weighed on the pound.

Another worry for traders is the prospect of a fresh push for Scottish independence.

“Renewed debate about the choice of currency for an independent Scotland will rekindle uncertainty. Sterling risks $1.2800 in the current strong dollar environment,” said Chris Turner, head of foreign exchange strategy at ING.

Differences over Brexit have strained relations with the government in London, and Scotland will start preparing for an independence referendum before May 2021, First Minister Nicola Sturgeon said on Wednesday.

Scots rejected independence in a 2014 referendum and support since then has stuck at around 45 percent, opinion polls say.

Reporting by Tom Finn; Editing by Hugh Lawson

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