* Graphic: World FX rates in 2018
* Graphic: Trade-weighted sterling since Brexit vote (Updates prices)LONDON, Nov 26 (Reuters) - The pound steadied on Mondayafter Britain sealed a deal with the European Union on quittingthe bloc, with the currency's gains curbed by doubts aboutwhether Prime Minister Theresa May can get the agreement througha divided parliament.
With European leaders endorsing on Sunday May's plan forfuture ties between Britain and the bloc, sterling traders arefocused on a parliamentary vote on the deal likely to take placein mid-December.May is seeking to win over critics in her Conservative andopposition parties but the odds look stacked against her withcriticism of the agreement approved in Brussels from all sides,including from the Northern Irish party propping up her minoritygovernment. "The failure of the pound to rally on recent positivedevelopments suggest the market is pricing in that the dealwon't pass the first time in parliament," said Lee Hardman, acurrency analyst at MUFG."During the next two weeks the pound will likely trade withincreased volatility."Brexit negotiations and political uncertainty in Britainremain the key drivers for the pound, and many analysts arecautious about its prospects.The pound traded flat versus the dollar at $1.2821 at 1630 GMT and traded down 0.1 percent against the euro at88.51 pence. Recent positioning data suggests hedge funds have started tounwind large short positions on sterling as hopes grow thatBritain may manage to negotiate an orderly Brexit.Net short positions on the pound saw their fourth biggestweekly drop in over a year, according to CFTC data for the weekending Nov. 16. But growing domestic opposition to May's Brexit arrangementhas continued to pressure sterling, pulling it down 2.5 percentfrom a Nov. 7 high of $1.3176."The outcome being priced into GBP right now is the idea ofa successful second vote in parliament on the negotiated dealand an orderly exit on March 29," said Simon Derrick, chiefcurrency strategist at BNY Mellon.Derrick said a "significant financial market reaction" tothe failure of the first vote could help concentrate the mindsof the politicians that voted against it.May is embarking on a two-week campaign to sell her plan tothe British electorate.No-one knows what will happen if Britain's parliamentrejects the Brexit deal the government has reached with theEuropean Union, she said on Monday. (Reporting by Tom FinnEditing by Robin Pomeroy)
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