* Graphic: sterling and gilt yields bit.ly/2dgAXn1
* Graphic: World FX rates in 2016 tmsnrt.rs/2egbfVh
Dec 1 Sterling held firm above $1.25 on Thursday, having recorded its best month of gains against the dollar since March and its best month against the euro since 2009.
Analysts said a survey of Britain’s factory output due at 0930 GMT was unlikely to impact the pound significantly, with some questioning whether a broad rally in the dollar has any further to run until detail of president-elect Donald Trump’s pro-growth policies are unveiled.
Economists polled by Reuters expect Markit’s Purchasing Managers’ Index (PMI) of manufacturing companies to hit 54.5 in November, a shade higher than last month’s 54.3.
Another factor supporting the pound has been signs that investors are reducing short positions on the currency that surged after Britain’s vote to leave the European Union in June.
Sterling net shorts fell for a second straight week to 74,318 contracts, data showed on Monday.
“The most likely outcome is that volatility continues to fall and the pound drifts in a range against the dollar, with EUR/GBP reflecting the European political mood, which in turn gives GBP/USD a bearish bias overall,” Societe Generale strategist Kit Juckes said.
The pound gained 0.2 percent against the dollar to trade at $1.2535, and was a touch up against the yen and the euro. (Reporting by John Geddie; Editing by Andrew Heavens)