BRITAIN'S POUND UPDOWN

REUTERS - JUNE 9, 2020 - The pound fell against the dollar and euro on Tuesday, erasing Monday's gains, in a move driven by shifts in global risk appetite, as well as domestic concerns over Brexit and the British economy re-opening.

The pound has risen 2.6% against the dollar this month as several countries emerge from lockdowns, weakening demand for the safe-haven U.S. currency.

But sterling's eight-day winning streak was set to break as the dollar pushed higher against a basket of currencies on Tuesday.

"Sterling is highly sensitive to these changes in risk sentiment - it's a more risky currency than it was a couple of months ago and some years ago," said Ulrich Leuchtmann, head of FX and commodity research at Commerzbank.

The pound hit a new three-month high of $1.2757 in overnight trading, before falling to as low as $1.2620 in early London trading. It was at $1.2653 at 1210 GMT, down 0.6% on the day.

Against the euro, the pound was down around 0.4% at 88.10 pence.

Investors are still waiting for more information about the proposed re-opening of the UK economy.

Britain introduced a 14-day quarantine for international arrivals on Monday. Airlines want this move scrapped, as they say it could lead to more job losses just as they were hoping to launch a recovery from COVID-19.

So-called "air bridges" - corridors which allow unrestricted movement between Britain and some other countries - will open from June 29, a UK tourism lobby group said on Tuesday, citing assurances it said it received from senior government sources.

Uncertainty about Brexit is also a cause for concern for sterling investors, said Commerzbank's Leuchtmann.

The fourth round of trade talks between Britain and the EU finished with both sides saying little progress had been made. Britain has until the end of July to request an extension to the transition period which is due to end after December 2020.

"We still see scope for further GBP upside as limited and look for the reversal of the recent EUR/GBP drop as the UK-EU trade deal uncertainty (and its negative implication for the UK's 2021 growth outlook) weighs on GBP, with EUR/GBP moving towards the 0.91 level by month end," ING strategists said in a note to clients.

Britain will begin negotiating a post-Brexit trade agreement with Japan on Tuesday which the government said both sides hoped would enter into force by the end of this year.

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