* Graphic: World FX rates in 2020 http://tmsnrt.rs/2egbfVh
* Graphic: Trade-weighted sterling since Brexit vote http://tmsnrt.rs/2hwV9Hv
LONDON, April 22 (Reuters) - Sterling fell on Thursday,
erasing the week's gains against the dollar, as investors
weighed up the outlook for an economic recovery in Britain.
After a short squeeze at the start of April, the pound has
strengthened against the dollar in the last couple of weeks - a
move that Kenneth Broux, FX strategist at Societe Generale, said
was driven by U.S. Treasury yields coming down from their recent
highs and prompting the dollar to weaken.
"If U.S. 10-year yields were to test and break 1.50%, that
would be bullish for the pound, certainly against the dollar,"
"I think the macro economic data (in Britain) is
brightening, we've seen that in the economic numbers this week
... we also have strong consumption.
"The only question really for the pound is how much is
priced in, in terms of the economy. We know Q2 will be
strong-ish but we don't know how strong it is and what is priced
British manufacturers' expectations of an economic rebound
rose to their highest since 1973 this month as the country began
to recover from the slump caused by the COVID-19 pandemic, the
Confederation of British Industry said.
But the pound fell during the European session, in a move
which analysts said lacked a clear fundamental driver.
At 1533 GMT, the pound was at $1.3844 versus the dollar,
down 0.6% on the day. Versus the euro, it was down
around 0.5% at 86.85 pence per euro.
"There's still a lot of speculation out there of how
aggressive the rebound in consumption is, what the drawdown in
household savings is, all these kind of things, once the service
sector reopens, and this uncertainty is just leaving sterling
trading between that $1.38-$1.40 range," said Simon Harvey,
senior FX market analyst at Monex Europe.
"We saw big gains at the beginning at the week and now we're
seeing a reversion of this."
Earlier this week, sterling hit a six-week high against the
dollar after Britain's unemployment rate unexpectedly fell for a
second month in a row in the December to February period, most
of which the country spent under a tight COVID-19 lockdown.
UK retail sales data is due on Friday, along with flash PMIs
- which Societe Generale's Broux said he expected to be "very,
very strong" in services.
Non-essential shops in England and Wales re-opened on April
12, as part of a plan to ease the COVID-19 restrictions. The
number of people going to shops in Britain jumped 87.8% last
week, data on Monday showed.
(Reporting by Elizabeth Howcroft; Editing by Larry King, Gareth
Jones and Alex Richardson)