* Pound sinks broadly on Brexit jitters
* Dollar bid higher on surging virus cases
* Quiet trading among G10 majors
* Graphic: World FX rates in 2020 https://tmsnrt.rs/2RBWI5E
By Ritvik Carvalho
LONDON, Dec 8 (Reuters) - Britain's pound was the biggest
mover in otherwise quiet trade among the G10 group of currencies
on Tuesday, falling broadly as caution grew among investors
awaiting the outcome of Brexit trade deal talks that have come
down to the wire.
With only three weeks to go for Britain to fully complete
its exit from the European Union, leaders have failed to narrow
differences on a post-Brexit trade deal. Against the dollar, the pound was nearly half a percent
lower at $1.3323. GBP=D3
Against the euro, it was 0.3% lower at 90.74 pence.
EURGBP=D3
Investors grew increasingly jittery at the start of the
week, pushing sterling more than two cents lower against the
dollar on Monday after news that British Prime Minister Boris
Johnson would travel to Brussels this week for what some say
will be a last roll of the dice to secure a trade deal.
The pound recovered some of that ground on Tuesday but still
traded on the defensive.
"Sterling has demonstrated that there has been a shift in
confidence surrounding a Brexit trade deal in the past few
days," said Rabobank's head of FX strategy Jane Foley, who noted
the simultaneous weakening of the pound and increase in option
volatility.
Implied volatility on the pound - a measure of expected
future swings in the currency - hit 8-month highs, a sign that
traders were bracing themselves for gyrations. GBPSWO=FN
GBPONO=FN
"The fact that Johnson will travel to meet von der Leyen
later this week means that all is not lost with respect to a
deal," Foley added.
"However, given that the issues of fisheries and level
playing field have been in the spotlight for so long, it may be
a bit of a long shot to expect that they can suddenly find a new
angle to compromise on."
ANY EXCUSE
Elsewhere, concern at surging coronavirus cases in the
United States cast a shadow over optimism about vaccinations and
fiscal support for the U.S. economy - sapping bulls' momentum.
Against a basket of currencies =USD , the greenback edged
higher to 90.969 and the Australian and New Zealand dollars took
a breather and held near recent peaks. AUD/
The euro EUR= sat at $1.2102.
"We continue to see the broad dollar under pressure, said
OCBC Bank strategist Terence Wu.
"However, there seems to be some fatigue setting in, with
the upside momentum for the likes of euro and Aussie fading
somewhat ... any negative headlines may provide an excuse for a
risk-off tilt."
In Asia, that came from a coronavirus surge in South Korea
which stalled a rising won KRW= and wobbled the Kospi .KS11
stock index. .KS In the United States, California has shut all but critical
infrastructure and retail operations in its worst-hit areas as
U.S. COVID-19 infections are at their peak, with an average of
193,863 new cases reported each day over the past week.
Anthony Fauci, the U.S. government's top infectious disease
expert, warned mid-January "can be a really dark time for us" if
gatherings over the holiday season spur even greater spread of
the virus.
The U.S. Congress will vote this week on a stop-gap funding
bill to provide more time for lawmakers to reach a deal on a
bigger COVID-19 relief package.
That could renew dollar selling by improving investors'
appetite for riskier currencies. But after so many false dawns
on the stimulus front traders were content to wait and see.
Later on Tuesday business sentiment surveys in Germany and
the United States are due and will offer some sense of how
deeply the latest wave of COVID-19 has hurt consumers' mood.