* Graphic: World FX rates in 2020 tmsnrt.rs/2egbfVh
* Graphic: Trade-weighted sterling since Brexit vote tmsnrt.rs/2hwV9Hv
By Iain Withers
LONDON, March 26 (Reuters) - Sterling extended gains against the dollar on Thursday, before an expected show of support for the British economy from the Bank of England and the government to limit the economic hit from the coronavirus outbreak.
The BoE, which made two emergency rate cuts and ramped up its bond-buying programme this month, publishes its latest monetary policy statement at 1200 GMT.
It is expected to hold fire on further action for now but stress it is ready to do more - probably by expanding its bond-buying even more - if needed to stop a coronavirus-related shutdown from plunging the country into a long recession.
Separately, finance minister Rishi Sunak is expected to detail how he plans to support Britain’s 5 million self-employed workers through the crisis.
The pound has been hammered in recent weeks amid panic in global markets, touching lows not seen since 1985 last week as investors scrambled for dollars - the world’s most liquid currency and one seen as a safe haven in times of crisis.
A $2 trillion stimulus package agreed by U.S. politicians to shield the world’s biggest economy and co-ordinated action by central banks including the BoE to boost the supply of dollars have helped ease stress in money markets and some of the selling pressure on sterling.
The pound edged up versus the greenback on Thursday after two previous days of gains and was last up 0.5% at $1.1928 .
Against the euro it fell 0.2% to 91.80 pence per euro .
“We have a strong combination of Brexit and coronavirus uncertainty that creates a difficult situation for the UK in comparison to the rest of the world,” Christophe Donay, head of asset allocation and macro research at Pictet, told a media call.
“Relatively speaking the UK is in a tough situation. The current account deficit is high ...This is all not a great signal for sterling versus the other currencies.”
On Wednesday, the pound swung from $1.1971 to $1.1640 within a few hours, showing how volatile trading conditions remain.
Implied sterling-dollar volatility is down from last week’s long term peaks but remains high, suggesting further big moves could be in store.
“Financial market conditions would need to normalise further in the near-term to encourage the pound to extend its rebound,” analysts at MUFG said in a note.
Reporting by Iain Withers, Additional reporting by Dhara Ranasinghe; ; editing by John Stonestreet