July 27, 2018 / 7:53 AM / 3 months ago

Sterling registers third weekly drop as Brexit concerns weigh

LONDON (Reuters) - Sterling nursed losses on Friday and is poised to register its third consecutive weekly loss as concerns about the progress of Brexit negotiations trumped any optimism ahead of a likely interest rate hike next week.

European Union Brexit negotiator Michel Barnier rejected key elements of Britain’s new trade proposals on Thursday even as he and his new British counterpart Dominic Raab voiced a shared determination to reach a deal by October.

Negative headlines on the Brexit front and a rebound in the dollar prompted the British currency to register its biggest daily loss in 1-1/2 weeks.

Commerzbank strategists said in a note that the pound should not suffer much as the fundamental policy difference between the Bank of England and the European Central Bank had been underlined.

On Friday, the pound held steady at a three-day low of $1.3111.

Market bets for a Bank of England rate hike next week have settled at a firm 81 percent. In contrast, the European Central Bank backed investor expectations for a 10 basis point hike only in October 2019, its first since 2011.

Against the euro, sterling was steady at 88.86 pence.

FILE PHOTO: A British Pound Sterling note is seen in this June 22, 2017 illustration photo. REUTERS/Thomas White/Illustration/File Photo

Reporting by Saikat Chatterjee; Editing by Alison Williams

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