FOREX-Euro sees sigh of relief as dollar weakens on US-China trade deal hopes

* Chinese yuan still below 7 vs dollar, sign that traders
still
nervous about US-China trade deal
* Sterling strengthens as Conservatives poised to win
election,
members say would back Brexit deal
* Graphic: World FX rates in 2019 http://tmsnrt.rs/2egbfVh

By Olga Cotaga
LONDON, Nov 18 (Reuters) - The euro enjoyed a small respite
on Monday, jumping to an 11-day high versus the U.S. dollar, on
expectations that Washington and Beijing can soon sign off on a
deal to end a trade war that has been a drag on global economic
growth.
Faint optimism for a breakthrough was supported by a report
on Sunday from Chinese state news wire Xinhua, which said the
two sides had "constructive talks" over the weekend.
The export-oriented European economy has suffered from the
16 month long trade dispute between the world's two largest
economies. The tariff war has taken a toll on the world's
manufacturing.
Investors injected $3 billion of inflows into European
equities over the past two weeks, ending a record run of 85
weeks of persistent outflows, EPFR data showed last week.
"Market participants remain optimistic that a partial
U.S.-China trade deal will be signed soon and have welcomed
tentative signs of economic improvement outside of the U.S.,
especially in the euro zone, both of which are eroding the
relative appeal of the U.S. dollar," said Lee Hardman, currency
analyst at MUFG.
The euro was last up 0.1% at $1.1068 EUR=EBS , its highest
since Nov. 7, and the index which tracks the greenback against
six major currencies was down 0.1% at 97.90 .DXY .
The offshore Chinese yuan, however, remained below 7 per
dollar, last falling 0.1% to 7.0142 CNH=EBS . The yuan is the
most sensitive currency to the trade dispute.
"USD/CNY above 7.0 suggests that the market is not yet
convinced a solution is near," said Marshall Gittler Chief
Strategist at FX analysis firm ACLS Global.
The liveliest mover, however, was the pound, creeping up
0.3% against the dollar to $1.2945 GBP=D3 and against the euro
to 85.41 pence EURGBP=D3 . It has surged to a 17-day high
versus the dollar and a six-month high versus the common
currency.
Sterling was boosted by expectations that the Conservative
Party could win a majority in the Dec. 12 election, as well as
by British Prime Minister Boris Johnson saying that all Tory
candidates in the election have pledged to back his Brexit deal.
This could open the door to getting the Brexit deal agreement
passed through parliament. Johnson's Conservatives have a 14 point lead over the
opposition Labour Party, a poll published by Good Morning
Britain showed on Monday. "Anyone firmly believing in a Tory victory can expect
further potential in sterling," said Commerzbank analysts in a
note to clients, though they added that "the FX market is still
quite sceptical" towards a Tory win.