UPDATE 1-Sterling steady below $1.30 before Brexit Party election announcement

Sterling held just below $1.30 on Friday ahead of Nigel Farage's Brexit Party press conference where local media said he was expected to put forward fewer candidates for the general election on Dec. 12, a move that could boost the pound.

Investors fear a full field of Brexit Party candidates could win over pro-Brexit voters from the ruling Conservatives and thereby boost the leftist Labour Party, analysts said. Farage has dismissed reports that his party will pull candidates to avoid damaging the Conservatives as "idle speculation". "We'll be watching the Brexit Party announcement with some interest," said Jeremy Stretch, Head of G10 FX Strategy at CIBC Capital Markets.

Farage is expected to speak later in the morning. Against a weaker dollar, the pound was up 0.1% at $ 1.2949. Versus the euro, sterling traded flat at 86.1 pence.

The currency was unmoved by the release of the Purchasing Managers' Index (PMI) which rose to 49.6 from 48.3 in September, its highest level since April and topping all forecasts in a Reuters poll of economists. However, this was attributed to a stockpiling rush before the aborted Oct 31 Brexit deadline. UK gilt futures, however, dropped around 10 ticks after the PMI, which still lies below the 50 dividing line between growth and contraction.

Prime Minister Boris Johnson called the Dec. 12 election after his Brexit deal with the European Union was held up by parliament, scuttling his vow to deliver Brexit by the end of October. He said the election would break what he cast as political paralysis thwarting Britain's departure and undermining confidence in the economy. Many reckon however that the chances are high of a hung parliament so the election campaign of the Brexit Party could be crucial to the outcome.

"Downside risks for sterling result mainly from a strong election result for Nigel Farage's Brexit Party, which from the point of view of most market participants would increase the risk of a no-deal Brexit," Commerzbank's Thu Lan Nguyen wrote in a note to clients. October was the pound's best month in over a decade, as the currency rallied in the build-up to the mid-month European Union summit at which a new Brexit deal was agreed.

Some of these gains were lost when Johnson subsequently failed to secure his deal's ratification in parliament. But the EU decision to extend the Brexit deadline to Jan. 31 scrapped the risk of a no-deal exit on Oct. 31, allowing the currency to hang on to most of its gains.

(This story has not been edited by Devdiscourse staff and is auto-generated from a syndicated feed.)