(Repeats Wednesday item without changes)
By Jamie McGeever
LONDON, Nov 14 (Reuters) - Sterling is being whiplashed by Brexit headlines and Brexit headlines only these days, it seems. This is understandable, but the currency's fate next year will be determined by global economic conditions, which may be about to deteriorate.
This is a scenario that doesn't necessarily weaken the pound: the Fed could be forced to halt its rate-raising campaign if the U.S. economy rolls over, reducing the dollar's yield advantage over all major currencies, including sterling.
It's worth bearing this in mind, especially in light of the latest wave of headlines that have followed Prime Minister Theresa May's securing of a European Union divorce deal. The proposal now awaits parliamentary approval.
To be sure, Brexit has already taken its toll on sterling, and Britain hasn't even left the EU yet. It has fallen 10-15 percent since the referendum in June 2016, and is one of the worst-performing major currencies this year.
Britain is already expected to be the most sluggish economy in Europe next year along with Italy, growing just 1.2 percent, according to the European Commission, and likely to be one of the weakest of all developed economies.
This raises questions over how far the Bank of England will raise interest rates. The Bank has indicated it will tighten policy next year but investors are bound to cast doubt on that if, as expected, global growth falters.
With its relatively large current account deficit, high inflation and low real interest rates, Britain is a "high beta" economy, meaning it outperforms in good times and underperforms in bad. Its open economy is more exposed to global conditions than most, and the UK stock market is more geared to export-dependent firms than many others.
As Standard Bank's Steven Barrow points out, British exports and imports account for around 62 percent of GDP compared with a global average of around 55 percent. This makes the UK economy more vulnerable to slowing global growth and trade disruptions.
In Bank of America Merrill Lynch's latest monthly fund manager survey, 44 percent of respondents said they expect global growth to slow in the next year, the gloomiest outlook on the world's economy since November 2008.
THE POUND ALSO RISES?
There are some signs Britain has weathered the brewing economic storm, certainly the European economy's surprisingly weak performance this year. European PMIs have slowed markedly, euro zone GDP is expanding at its slowest pace in four years and the German economy contracted in Q3. Yet the UK economy has held up well.