FOREX-Dollar ends three weeks of decline as Brexit sours sentiment

* Dollar remains close to 2018 lows
* Sterling falls heading in to crucial Brexit weekend
* U.S. fiscal stimulus delays dent sentiment
* Euro gives up post-ECB gains
* Investor take shelter in safe haven Swiss franc
* Graphic: World FX rates in 2020 https://tmsnrt.rs/2RBWI5E

By Julien Ponthus
LONDON, Dec 11 (Reuters) - Pressure was easing on the dollar
on Friday, with the currency set to end three straight weeks of
declines, while sterling suffered losses amid fears a
post-Brexit trade deal might not be reached before the end of
2020.
Overnight, hopes of a global economic rebound and a fading
pandemic in 2021 saw investors taking bets on riskier currencies
linked to rising commodity prices such as the Australian and
Canadian dollars AUD= CAD= , both of which hit 2018 highs.
But the U.S. dollar made a comeback in early European
trading as the mood soured and Brexit worries added to the
delays facing a new U.S. fiscal stimulus.
At 1144 GMT, the pressure was off the dollar, which was back
up 0.3% against a basket of major currencies, trading at 91.036
and moving away from the two-and-a-half-year low of 90.471 it
reached a week ago.
"Overall it's a risk-off move", said Kit Juckes, a foreign
exchange strategist at Societe General. Given the dollar's
recent losses, he said, it wasn't surprising to see some
investors were unfolding some of their positions.
He added that the state of the post-Brexit trade talks was
weighing on the market. Britain is now more likely to leave the
European Union on Dec. 31 without a trade deal than with a deal,
an EU official quoted the head of the European Commission as
telling the bloc's 27 national leaders.
Sterling GBP= suffered heavy losses and was down about
0.8% at $1.3185 before a weekend of brinkmanship. British and EU
negotiators have been told they have until the end of Sunday to
decide whether a trade deal is possible. GBP/
Options market moves show traders bracing for chaos, with
one-week implied volatility GBPSWO= at a nine-month high and
the premium of sterling puts to calls GBP1MRR= near its
highest since April as investors pay for downside protection.
The euro was also retreating against the dollar, losing
0.23% at $1.2115 after Thursday's gains, when the European
Central Bank announced a new round of stimulus in line with
market expectations. EU leaders also reached a compromise over a
pandemic aid package. The euro has soared 15% from three-year lows at the height
of the March panic. It has added nearly 2% in two weeks since
finally breaking $1.20 after multiple attempts.

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