UPDATE 1-Sterling hits 1-week low vs dollar as ebbs risk appetite

* Graphic: Global FX rates in 2020 tmsnrt.rs/2egbfVh

* Graphic: Sterling with trade pressure from Brexit vote tmsnrt.rs/2hwV9Hv (Price update, adding graphic, additional comment)

LONDON, Jan 26 (Reuters) – Sterling fell to a week-low low against the dollar and traded near one-week low against the euro on Tuesday as sentiment of risk over broader asset markets plummeted. gaining pressure on the currency.

Equity markets as measured by the MSCI Rural World Index and Wall Street futures were lower, giving the dollar a boost, while more risky currencies pulled back.

Expectations from a major U.S. fiscal stimulus package from President Joe Biden’s new administration have added to a sense of risk in markets in recent weeks, benefiting from the pound, which is at 2-1 / 2 year highs to beat the weak dollar.

Sterling hit an all-time high against the euro since May 2020 last week, with analysts pointing to the pound’s benefits to a slower release of COVID-19 vaccine in the European Union than in Britain.

But preventing a jump in European stocks, a pullback in a broader sense of risk on Tuesday – on concerns that the US fiscal package could hit bags – outweighed a lack of negative surprise from UK labor market data and pushing the pound lower.

U.S. Democrats are still trying to convince Republican lawmakers of the need for more stimulation, raising questions about when and in what form a package will be agreed.

“It is a duty of the broader risk approach so I think sterling still trades a little more on risk management than it is a fundamental domestic story,” said Jeremy Stretch, head of pre- CIBC Capital Markets ’G10 FX strategy, adding that the market was not too concerned about labor market data.

“That’s the broad question with a much stronger sense of equality, with question marks raised about the US stimulus package process.”

By 1035 GMT, sterling was down 0.2% against the dollar at $ 1.3651 and flat against the euro at 88.82 pence. It fell earlier to $ 1.3610 against the dollar, the lowest level in a week.

Data on Tuesday showed that Britain’s unemployment rate hit its highest level in nearly five years in the three months to November when coronavirus cases began to rise for the second time and most of the country returned. partially locked.

The number of jobs fell higher than ever, bringing the unemployment rate to 5.0%, the highest level since mid-2016, according to official data, although the rise was slightly weaker than economists forecast.

“The UK labor market report did not come as a negative surprise this morning (November unemployment was significantly lower than expected, while weekly earnings turned higher), suggesting a calm day for sterling today, ”ING said in a note. “Euro-sterling to trade around 89 pence.”