FOREX-Pound drops as Brexit impasse unsettled after Johnson-von der Leyen meeting

* Pound falls 0.5% as Brexit deadline extended to Sunday
* Dollar firm amid little tangible progress in U.S. stimulus
talks
* ECB seen expanding its asset purchase
* Graphic: World FX rates in 2020 https://tmsnrt.rs/2RBWI5E

By Hideyuki Sano
TOKYO, Dec 10 (Reuters) - The British pound lost about 0.5%
on Thursday after British Prime Minister Boris Johnson and
European Commission President Ursula von der Leyen agreed they
have until Sunday to take a "firm decision" about the future of
trade talks.
The European Commission and Britain remained "far apart" on
Brexit trade deal, the bloc's chief executive said after what
she described as a "lively" dinner with the British Prime
Minister.
"It looks like there won't be any agreement to present to
the EU summit starting today. Markets have been quite optimistic
about a deal. I'm a bit surprised," said Ayako Sera, senior
market economist at Sumitomo Mitsui Trust Bank.
Bank of England Governor Andrew Bailey has warned a no-deal
Brexit would cause longer-term damage to Britain's economy than
the COVID-19 pandemic, and the impact of the change might be
felt for decades. The British pound dropped to as low as $1.3311 and last
stood at $1.3345 GBP=D4 , down 0.4% on the day, though it
stayed above this week's low of $1.3225 set on Monday.
The U.S. dollar, which tends to fall when risk appetite is
strong, held firm against other major currencies as an agreement
on U.S. stimulus remains elusive as proposals and
counterproposals on COVID-19 aid have flown around the U.S.
Capitol. The dollar index stood at 91.029 =USD , off Friday's 2
1/2-year low of 90.471.
The dollar rose slightly to 104.28 yen JPY= .
The euro slipped to $1.2082 EUR= , after four straight days
of losses and down about a cent from its 2 1/2-year high of
$1.2177 touched on Friday.
Also curbing appetite for the common currency, the European
Central Bank is widely expected to expand its stimulus measures
to prop up the recession-hit currency bloc at its policy meeting
later on Thursday. ECB President Christine Lagarde has made clear in recent
weeks that a bigger Pandemic Emergency Purchase Programme (PEPP)
and more subsidised long-term loans for banks will form the
backbone of its policy measures.
Elsewhere, the Australian dollar stepped back to $0.7435
AUD=D4 from Wednesday's high of $0.7485, a 2 1/2-year high,
while the offshore Chinese yuan also hovered below its 2
1/2-year high set on Wednesday to trade at 6.5279 per dollar
CNH= .
Bitcoin was last up 1.7% at $18,622 BTC=BTSP .