* Graphic: World FX rates in 2020 https://tmsnrt.rs/2RBWI5E
By Hideyuki Sano
TOKYO, Sept 14 (Reuters) - The British pound flirted with a
1-1/2-month low against the dollar on Monday on fears about
no-deal Brexit while investors waited for Japan's ruling party
to choose a successor to Prime Minister Shinzo Abe.
The British pound changed hands at $1.2806 GBP=D4 , having
hit a 1 1/2-month low of $1.2767 on Friday.
Against the euro, it slid to 5 1/2-month low of 92.54 pence
per euro EURGBP=D4 and last stood at 92.47.
The pound was under pressure from fears that Britain will
end its post-Brexit transition period without agreeing any
trading arrangements.
London explicitly acknowledged last week that it could break
international law by ignoring some parts of its European Union
divorce treaty, prompting a rapid rebuke from the EU's chief
executive. Former British prime ministers Tony Blair and John Major
said on Sunday Britain must drop a "shocking" plan to pass
legislation that breaks its divorce treaty with the European
Union, in a breach of international law. The dollar stood at 106.13 yen JPY= , stuck in its familiar
territory in the past couple of weeks.
Japanese Chief Cabinet Secretary Yoshihide Suga is poised to
become head of Japan's ruling party on Monday and prime minister
on Wednesday, succeeding Shinzo Abe, the nation's
longest-serving leader. Because Suga has long been a loyal aide to Abe and has vowed
to continue his policies, few market players expect radical
changes.
"The focus is on the line-up of his cabinet as well as
whether he will call a snap election," said Minori Uchida, chief
FX strategist at MUFG Bank. "He is saying he will continue and
advance Abenomics but it is questionable how much advancement he
can make."
The euro held firm after three straight days of gains at
$1.18455 EUR= .
The common currency was supported after the European Central
Bank showed no apparent sign of stemming the single currency's
appreciation.
The dollar's index against a basket of currencies stood
little changed at 93.317 =USD , with focus on the Federal
Reserve's policy announcement on Wednesday.
Expectations of further monetary easing by the Fed have been
a drag on the dollar. The dollar index has lost more than 4% so
far this quarter.
But some analyst say markets may have gone too far in
expecting further stimulus from the Fed.
"Having set aside yield curve control (YCC) as a near-term
policy option, the FOMC does not seem to have an operational
consensus on how to use the balance sheet," New York-based
strategists at Standard Chartered Bank wrote in report. "This
may disappoint investors."