Sterling stays near four-month highs as UK avoids tariff tit-for-tat

By Lucy Raitano

(Reuters) - The British pound fell slightly against a firmer dollar on Thursday but remained close to four-month highs, bolstered by the UK's relatively measured approach to U.S. trade ructions.

The pound was last down 0.15% at $1.2941, having hit $1.299 on Wednesday, its highest level since November 7.

"It's mostly a dollar story at the moment driving markets. Cable is easing back from almost touching 1.30, moving back towards 1.29," said Francesco Pesole, FX strategist at ING of Thursday's slight GBP weakness.

Analysts highlighted Britain's largely balanced trade position with the U.S. as a supportive factor for the pound.

While the EU and Canada retaliated against U.S. President Donald Trump's 25% tariffs on all steel and aluminium imports on Wednesday, Britain's government did not follow suit, though it said it was disappointed with the decision.

"The important thing for GBP is that the UK has a trade deficit with the US and exports a lot more services than other countries, so is not as vulnerable to US tariffs as the European Union," said Michael Pfister, FX analyst at Commerzbank.

Sterling has gained more than 6% against the dollar since Trump took office in January.

On Thursday Trump threatened to slap a 200% tariff on all wines and other alcoholic products coming out of Europe if the European Union did not scrap its planned tax on American whiskey.

Against the euro the pound was up 0.2% at 83.81 pence.

(Reporting by Lucy Raitano; editing by Christina Fincher)