FOREX-Euro under pressure as Italy sticks to deficit target in budget
* Euro stuck below $1.13 on Italian jitters, growth worries
* Dollar pulls back from 16-month high on profit taking
* Sterling traders brace for Brexit cabinet meeting
* Swedish crown knocked lower by inflation data
* Graphic: World FX rates in 2018 (Adds details, updates prices)
By Tommy Wilkes
LONDON, Nov 14 (Reuters) - The euro struggled below $1.13 onWednesday as Italy stuck to its deficit target in a re-submitteddraft budget and after confirmation that the euro zone economygrew at its slowest pace in four years in the third quarter.
Major currencies traded in tight ranges in London tradinghours, with the dollar below a 16-month high hit this week asinvestors took profits.
Sterling slipped as investors prepared for PrimeMinister Theresa May's showdown with her cabinet colleagues whenshe will try to sell her Brexit agreement. Italy re-submitted its draft budget for next year to theEuropean Commission with the same growth and deficit assumptionsas a draft rejected last month for breaking European Unionrules, but with falling debt, the new draft showed. That rattled investors in volatile Italian government debtmarkets and pressured the euro.
The single currency fell to $1.1265 , down 0.2percent, after trading above $1.13 late Tuesday. The euro hit a16-month low of $1.1216 earlier this week.
Thu Lan Nguyen, a strategist at Commerzbank, said she "didnot anticipate an escalation in the crisis in Italy", but "muchwill depend on how the Europeans react. We are in a wait and seegame."
Concerns that the row, along with slowing economic growth,would force the European Central Bank to postpone monetarytightening next year might also hurt the euro, she added.
Euro zone gross domestic product rose by 0.2 percent in theJuly-September period, official data showed, confirming itsearlier preliminary flash estimate from Oct. 30. The numbers were in line with expectations. Industrialproduction in September declined 0.3 percent month-on-month.
U.S. INFLATION
The dollar index ticked 0.1 percent up to 97.383. Theindex hit a 16-month high of 97.693 on Monday.
Traders are now preparing for U.S. inflation data, due at1330 GMT. Economists polled by Reuters forecast consumer priceinflation of 0.3 percent in October, up from 0.1 percent inSeptember. Any strong reading could fire up dollar bullsexpecting more Federal Reserve interest rate rises.
"With the outlook for core prices skewed to the upside aswages are set to rise, today's number will reinforce the Fed'sapproach towards gradual and ongoing tightening, keeping USDsupported," ING analysts said in a note to clients.
Sterling skidded 0.4 percent to $1.2922 and fell 0.2percent versus the euro to 87.18 pence.
News of the draft Brexit deal had supported the euro onTuesday as agreement could reduce political uncertainty in oneof the bloc's principal trading partners.
The Swedish crown lost as much as 0.7 percent versus theeuro to 10.299 crowns after weaker-than-expectedinflation. The dollar was little changed versus the Japanese yen at 113.90. The yen touched a six-week low of 114.20 on Monday.
The Australian dollar weakened to $0.7199 against theU.S. dollar, down 0.2 percent.
The Canadian dollar was marginally lower at C$1.3240,trading near its four-month low brought on by a plunge in theprice of crude oil, a major Canadian export.
(Editing by Larry King and Hugh Lawson)
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