By Daniel Leussink
TOKYO (Reuters) - The pound stayed fragile on Tuesday after falling to an 11-month low against the dollar overnight on worries over a 'hard' Brexit from the European Union, while simmering U.S.-China trade tensions provided support to the greenback.
Comments from officials about a no-deal Brexit stoked fears Britain would crash out of the EU next year without securing a trade agreement.
Sterling
The dollar stayed firm on Tuesday, with the index (DXY) against a broad basket of currencies steady at 95.345.
Overnight, it edged close to the more-than-one-year high of 95.652 reached on July 19, before easing somewhat towards the end of the session.
Some analysts see trade tensions supporting the dollar as the United States economy is better placed to handle protectionism than emerging markets, and as tariffs may narrow the U.S. trade deficit.
"There is still a lot of uncertainty on the tariffs. We don't know exactly how much will be implemented and how bad it can get," said Shinichiro Kadota, senior FX and rates strategist at Barclays (LON:BARC) in Tokyo.
"If U.S. economic growth starts to slow down because of tariffs or because past tax-cut effects are waning, then I think the economic performance could fade, which could also lead to fading dollar strength," he said.
Minori Uchida, chief currency analyst at MUFG Bank, said the dollar drew additional support from earnings-led gains on Wall Street.
"The correlation between the U.S. dollar and U.S. equities is becoming really strong," he said, adding that the dollar "will continue to strengthen as long as U.S. stock markets remain bullish".
The euro (EUR=) remained weak after slipping to a five-week low of $1.1530 overnight, as German industrial orders fell more than expected in June, posting their steepest monthly drop in well over a year. It last traded a tad higher at $1.1558.
The yen
The talks "are seen as a factor that's pushing up the yen," said Uchida.
The offshore yuan
The Turkish lira firmed against the dollar after broadcaster CNN Turk, citing diplomatic sources, reported that a delegation of Turkish officials will head to Washington in two days to discuss an ongoing row between the two NATO allies.
The currency
It had plunged about 5.5 percent to a record low of 5.4250 overnight after the Trump administration announced on Friday that it was reviewing Turkey's duty-free access to U.S. markets.