Sterling headed for best week since January after Brexit votes
* Sterling up 1.7 pct vs dollar this week
* Bulls still nervous as May prepares for third vote
* Graphic: World FX rates in 2019 http://tmsnrt.rs/2egbfVh
* Graphic: Trade-weighted sterling since Brexit vote http://tmsnrt.rs/2hwV9Hv
LONDON, March 15 (Reuters) - The British pound was unchanged
on Friday at the end of its best week since January, as
investors waited for next week's parliamentary vote on Prime
Minister Theresa May's deal to exit the European Union.
Sterling has rallied this week - it is up 1.7 percent
against the dollar - after British lawmakers voted against
leaving the EU without a deal and backed a delay to the March 29
The vote against a no-deal Brexit was non-binding, but
investors believe Britain will now avert a disorderly Brexit
that would severely damage its economy.
May has said she will hold another vote next week on her
deal, although lawmakers have already rejected it twice. She
hopes to use the threat of a longer delay to Brexit to persuade
eurosceptics in her party to back her.
"The market has already shifted significantly to price out a
no-deal Brexit," said BNP Paribas economists. The bank's
analysis shows short sterling positioning has been unwound to
+10 from -33 at the beginning of the year. A -50 would mark the
biggest short position possible, +50 the largest long.
The bank also noted that the probability of a rate increase
this year had risen to 50 percent from 24 percent in February,
according to money markets.
"As this suggests markets may be vulnerable to any downside
surprises, we do not yet see attractive risk/reward to enter
structural long GBP or bearish UK rates outright positions," BNP
Paribas analysts wrote.
The pound, which has traded between $1.2945 and $1.3380
this week, was unchanged on Friday at $1.3240. It was
also little changed against the euro, losing 0.1 percent to
85.50 pence per euro.
Uncertainty remains for sterling. All 27 EU member states
must agree to a request for a Brexit extension, and it remains
unclear when and on what terms Britain will leave.
"Despite the increased risks facing rebel Conservative MPs,
we doubt that sufficient numbers will fall back into line to
pass her deal given entrenched hard line opposition," MUFG
analysts wrote on Friday.
(Reporting by Tommy Wilkes, editing by Larry King)
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