FOREX-Pound dogged by Brexit worries, yen looks to Abe successor vote

* British pound at 1 1/2-month low
* Yen looks to politics as Suga set to succeed Abe
* Dollar under pressure ahead of Fed policy announcement on
Wed
* Graphic: World FX rates in 2020 https://tmsnrt.rs/2RBWI5E

By Hideyuki Sano
TOKYO, Sept 14 (Reuters) - The British pound flirted with a
1 1/2-month low against the dollar on Monday on fears about
no-deal Brexit while investors waited for Japan's ruling party
to choose a successor to Prime Minister Shinzo Abe.
The British pound ticked up slightly in Asia to $1.2819
GBP=D4 , after having hit $1.2767 on Friday, its lowest since
July 24. It has lost more than 4% so far this month, the worst
among G10 currencies.
Against the euro, it slid to a 5 1/2-month low of 92.90
pence per euro EURGBP=D4 and last stood at 92.39.
The pound was under pressure from fears that Britain will
end its post-Brexit transition period with no trade agreements.
London explicitly acknowledged last week that it could break
international law by ignoring some parts of its European Union
divorce treaty, prompting a rapid rebuke from the EU's chief
executive. Former British prime ministers Tony Blair and John Major
said on Sunday Britain must drop a "shocking" plan to pass
legislation that breaks its divorce treaty with the European
Union, in a breach of international law. The dollar stood at 106.13 yen JPY= , stuck in its familiar
territory in the past couple of weeks.
Japanese Chief Cabinet Secretary Yoshihide Suga is poised to
become head of Japan's ruling party on Monday and prime minister
on Wednesday, succeeding Shinzo Abe, the nation's
longest-serving leader. Because Suga has long been a loyal aide to Abe and has vowed
to continue his policies, few market players expect radical
changes.
"The focus is on the line-up of his cabinet as well as
whether he will call a snap election," said Minori Uchida, chief
FX strategist at MUFG Bank. "He is saying he will continue and
advance Abenomics but it is questionable how much advancement he
can make."
The euro held firm after three straight days of gains at
$1.18455 EUR= .
The common currency was supported after the European Central
Bank showed no apparent sign of stemming the single currency's
appreciation.
Still, it faces an uphill battle in tackling the $1.20
barrier, with investors wary euro zone policy makers may not
want to see the currency strengthen much beyond that level.
Some euro zone countries, such as France and Spain, are
reporting rises in coronavirus infections, in contrast to falls
in the United States, clouding the outlook for economic
recovery. The dollar's index against a basket of currencies stood
little changed at 93.317 =USD , with focus on the Federal
Reserve's policy announcement on Wednesday.
Expectations of further monetary easing by the Fed have been
a drag on the dollar. The dollar index has lost more than 4% so
far this quarter.
The Fed has announced late last month that it has adjusted
its policy strategy, noting that it wants inflation to average
2% over time.
But some analysts say markets may have gone too far in
expecting further Fed stimulus.
"Having set aside yield curve control (YCC) as a near-term
policy option, the FOMC does not seem to have an operational
consensus on how to use the balance sheet," New York-based
strategists at Standard Chartered Bank wrote in report. "This
may disappoint investors."