FOREX-Dollar finds footing after stocks slide, Brexit fears hammer pound

* Euro whipsaws after ECB
* Pound heads for worst week since March
* Graphic: World FX rates in 2020 https://tmsnrt.rs/2RBWI5E

By Tom Westbrook
SINGAPORE, Sept 11 (Reuters) - The dollar clung to gains on
Friday after a rout in stocks sent nervous investors to its
safety, while sterling was poised for its worst week since March
as British plans to break a divorce treaty with Europe rekindled
the spectre of a no-deal Brexit.
In a volatile session overnight the pound languished while
other majors whipsawed in tandem with moves in the euro and the
U.S stock market.
The common currency after European Central Bank President Christine Lagarde insisted
the bank does not target the exchange rate. But her subsequent remark that the bank indeed monitors it,
and its effect on inflation - together with a tumble in U.S.
stocks - brought investors rushing back to dollars and sank the
euro back to $1.1825, where it sat in morning trade.
The risk-sensitive Australian dollar AUD=D3 tracked the
move and was up as far as $0.7325 before retreating to $0.7263
early in the Asian session. The New Zealand dollar NZD=D3 fell
to $0.6648 and was under gentle pressure on Friday.
Both could fall a little further during the day, Westpac
analysts said, as the mood remains fragile and equities are
likely to take the lead with little on the data tap in Asia.
Asia's stock markets opened lower and U.S. futures ESc1
NQc1 pulled back to just above flat. MKTS/GLOB
The safe-haven Japanese yen JPY=EBS held steady at 106.12
per dollar, having inched higher overnight. Against a basket of
currencies the dollar =USD hung on to modest gains and looks
set to finish a second consecutive week ahead.
The main laggard has been the pound GBP= . It tested an
overnight low of $1.2773 early in the Asia session and has lost
3.6% on the dollar this week and about as much against the euro
EURGBP= as Brexit turmoil resurfaced.
The European Union told Britain on Thursday it should
urgently scrap a plan to break their divorce treaty. But Britain
has refused to budge and pressed ahead with a draft law that
could sink four years of Brexit talks. EU diplomats and officials said the bloc could take legal
action against Britain, though that would not resolve anything
before the end-of-year deadline for Britain's full exit, which
is looking increasingly messy.
"The high risk of no trade deal between the UK and EU is a
major drag for the pound against most major currencies," said
Commonwealth Bank of Australia currency analyst Kim Mundy.
Investors are looking to a slew of ECB speakers later today
for further guidance on the bank's outlook, as well as British
GDP data and U.S. inflation for further clues to the progress of
the global recovery from coronavirus lockdowns.