FOREX-Dollar edges lower as U.S.-China trade talks continue; pound slips

* U.S.-China trade deal close, Trump says; negotiations
continue
* Sterling weakens after polls show Conservative lead is
narrowing

(Updates to U.S. afternoon)
By Saqib Iqbal Ahmed
NEW YORK, Nov 26 (Reuters) - The U.S. dollar was slightly
lower against a basket of currencies on Tuesday as traders
looked to the latest developments in the U.S.-China trade talks
for direction and the shortened holiday week kept currency moves
muted.
The United States and China are close to agreement on the
first phase of a trade deal, U.S. President Donald Trump said on
Tuesday, after top negotiators from the two countries spoke by
telephone and agreed to keep working on remaining issues.
The Global Times, a tabloid run by the ruling Communist
Party's official People's Daily, reported on Sunday that China
and the United States were "moving closer to agreeing" on a
"phase one" trade deal, even as Washington and Beijing had not
agreed on specifics or the size of rollbacks of tariffs on
Chinese goods.
"Does this tell us anything we didn't know six, seven weeks
ago? Hard to say. But I'll believe when I see it," said Neil
Wilson, chief market analyst at Markets.com.
The United States has imposed tariffs on Chinese goods in a
16-month long dispute over trade practices that the U.S.
government says are unfair. China has responded in kind with its
own tariffs on U.S. goods.
If both sides cannot reach an agreement soon, the next
important date to watch is Dec. 15, when Washington is scheduled
to impose even more tariffs on Chinese goods.
On Tuesday, data showed the U.S. goods trade deficit fell
sharply in October as both exports and imports declined,
pointing to a continued reduction in trade flows that has been
blamed on the Trump administration's "America First"
policy. Data also showed U.S. consumer confidence fell for a fourth
straight month in November amid worries about current business
conditions and employment prospects, but remained at levels
sufficient to support a steady pace of consumer spending.
The dollar index .DXY , which compares the greenback
against six other major currencies, was down 0.08% at 98.246.
"Near-term escalation appears to be off the table, for the
time being, despite Trump's threats to raise tariffs if there is
no agreement," said Marc Chandler, chief market strategist at
Bannockburn Global Forex. "However, the fundamental disagreement
is illustrated by Xi arguing for an equal deal while Trump
claims that because China already has a large advantage, an
agreement must favor the U.S," he added, referring to Chinese
President Xi Jinping.
Against the yen, the dollar was up 0.12%. The U.S. currency
had jumped to a two-week high against the safe-haven Japanese
currency in Asian trading.
Overall, currency trading is slowing before the U.S.
Thanksgiving holiday on Thursday, with traders increasingly
pricing in tighter trading ranges for major currencies, analysts
said.
Sterling was 0.26% lower at $1.2864 on Tuesday after a
second opinion poll showed the Conservative Party's lead is
narrowing before the British election next month. Prime Minister Boris Johnson's Conservatives have led the
opposition Labour Party and hopes that a Johnson victory would
end more than three years of uncertainty over Brexit have lifted
the pound, despite concern about a no-deal exit from the
European Union.

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