* Graphic: World FX rates in 2020
* Graphic: Trade-weighted sterling since Brexit vote (Updates prices)By Elizabeth HowcroftLONDON, July 20 (Reuters) - The pound rose above $1.26 onMonday and recovered from an early-morning 20-day low againstthe stronger euro, but investors remained bearish as Britain'sbleak economic outlook and Brexit risks weighed on the currency.Since Friday, European Union leaders have been meeting tothrash out plans for an EU-wide coronavirus recovery fund. Signsof progress in negotiations saw the euro touch a 19-week high,pushing euro-sterling to a 20-day high around 0604 GMT.With a new round of Brexit negotiations between Britain andthe EU beginning on Tuesday, hopes for a trade deal in time forthe year-end expiry of the transition period following Britain'sdeparture from the bloc are fading fast. "There will be a deal but it will be a hard Brexit, probablyworse than a Canada deal," said Kaspar Hense, a portfoliomanager at Bluebay Asset Management.Hense is bearish on the pound versus both dollar and eurobut took some profit on his short cable position at $1.25 onFriday because he said EU leaders reaching an agreement couldboost euro-dollar, to which cable is correlated."The growth outlook looks pretty bad. London is in focus aswell as the (Brexit) deal probably will be rather harshespecially on the services side," he said."These growth detractions are not going away," he said,adding that, from a structural perspective, the pound-dollarexchange rate could slide to parity over the longer term.Versus the dollar, sterling changed hands at $1.2637 at 1415GMT, up 0.6% since New York's close, having fallen overnightthen recovered gradually from around 0400 GMT .Against the euro, the pound was at 90.375 pence per euro -similar levels to last Monday's close - having gained around0.6% on the day as investors took profits on the euro . The speculative market's net short position on the pound gotsmaller from a second week in a row in the week to July 14,according to CFTC futures data. But the market is still asbearish on the pound as it was in December 2019. Tensions between China and Britain escalated over theweekend.
British drugmaker AstraZeneca's experimentalCOVID-19 vaccine was safe and produced an immune response inearly-stage clinical trials at Britain's University of Oxford,data on Monday showed.Britain's COVID-19 death toll is the highest in Europe, butthe country has begun to lift lockdown measures as case numbersand infection rates fall. Nearly half of Britain's biggest companies think it willtake until the second half of 2021 before business recovers fromthe coronavirus pandemic. <^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^Cable ^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^> (Reporting by Elizabeth Howcroft; Editing by Angus MacSwan)
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