Hopes for Brexit deal buoy euro, sterling Pound hits strongest...

• Hopes for Brexit deal buoy euro, sterling
• Pound hits strongest level vs euro since June
• Worries about Italy's finances cap euro's gains
• Higher U.S. yields fail to boost greenback
• Graphic: World FX rates in 2018 http://tmsnrt.rs/2egbfVh

(Updates market action, adds quote)

The euro and sterling rose on Wednesday, underpinned by optimism for a Brexit deal, while the dollar lost ground against a basket of currencies even as U.S. bond yields hovered at multiyear peaks.

The common currency's gains were limited by worries about the sustainability of Italy's public finances, though Italian Economy Minister Giovanni Tria reiterated on Wednesday that the government would do everything in its power to regain the confidence of financial markets.

"There is more optimism that they will find some agreement between Britain and (the) European Union before Brexit," said Steve Englander, global head of G10 FX research at Standard Chartered Bank in New York.

This week, Brexit negotiators have hinted at progress toward terms for Britain to leave the economic bloc in March, which gave investors hope for an orderly departure. Still, caution persists due to scant details.

On Wednesday, EU's Brexit negotiator, Michel Barnier, said the two parties have agreed on much of the withdrawal agreement ahead of a summit of all the bloc's 28 national leaders next week.

The pound GBP=D3 reached a two-week high at $1.3216 Wednesday and held a gain of 0.45 percent on the day. It hit its strongest level against the euro EURGBP=EBS since June 15 at 87.23 pence.

The euro EUR=EBS rose 0.3 percent to $1.15270 and held steady at 129.750 yen.

Some traders remain skeptical about a final Brexit deal. "We see a lot of volatility, so the good news may be a temporary thing because the EU has been quick to reject most proposals even if it has the backing of Labour," said Juan Perez, senior currency trader with Tempus, Inc. in Washington.

Perez was referring to the U.K. Labour Party whose spokesman on Wednesday downplayed a news report that some party members would back a Brexit deal that Prime Minister Theresa May supports.

The bounce in the two currencies offset the effects of an increase in U.S. Treasury yields, putting pressure on the dollar.

Benchmark 10-year yields US10YT=RR retreated from a seven-year high of 3.261 percent set on Tuesday, even as investors and dealers pared their bond holdings to make space for $36 billion 3-year and $23 billion 10-year note supply sold on Wednesday.

U.S. yields have increased on rising government debt supply and worries about higher inflation, which may push the Federal Reserve to raise short-term rates more quickly.

The ICE dollar index .DXY , which tracks the greenback against six major currencies, fell 0.2 percent on the day to 95.480. It hit a seven-week high on Tuesday at 96.155.

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	Currency bid prices at 2:43PM (1843 GMT) 

 Description	  RIC		 Last		   U.S. Close  Pct Change	 YTD Pct	 High Bid	Low Bid 
											  Previous				   Change				  
											  Session											
 Euro/Dollar	  EUR=		$1.1526		$1.1489	 +0.32%		 -3.91%	  +1.1545	 +1.1480 
 Dollar/Yen	   JPY=		112.5500	   112.9400	-0.35%		 -0.11%	  +113.2800   +112.5500 
 Euro/Yen		 EURJPY=	 129.73		 129.78	  -0.04%		 -4.03%	  +130.4900   +129.7500 
 Dollar/Swiss	 CHF=		0.9916		 0.9917	  -0.01%		 +1.78%	  +0.9933	 +0.9897 
 Sterling/Dollar  GBP=		1.3203		 1.3142	  +0.46%		 -2.29%	  +1.3216	 +1.3136 
 Dollar/Canadian  CAD=		1.3020		 1.2945	  +0.58%		 +3.52%	  +1.3026	 +1.2926 
 Australian/Doll  AUD=		0.7087		 0.7102	  -0.21%		 -9.15%	  +0.7130	 +0.7088 
 ar																							  

 Euro/Swiss	   EURCHF=	 1.1431		 1.1396	  +0.31%		 -2.20%	  +1.1444	 +1.1391 
 Euro/Sterling	EURGBP=	 0.8728		 0.8741	  -0.15%		 -1.74%	  +0.8754	 +0.8724 
 NZ Dollar/Dolar  NZD=		0.6462		 0.6472	  -0.15%		 -8.81%	  +0.6496	 +0.6455 
 Dollar/Norway	NOK=		8.2118		 8.2656	  -0.65%		 +0.06%	  +8.2685	 +8.1913 
 Euro/Norway	  EURNOK=	 9.4665		 9.5005	  -0.36%		 -3.86%	  +9.5096	 +9.4400 
 Dollar/Sweden	SEK=		9.1151		 9.1036	  +0.43%		 +11.14%	 +9.1192	 +9.0789 
 Euro/Sweden	  EURSEK=	 10.5080		10.4628	 +0.43%		 +6.80%	  +10.5140	+10.4365 
	 
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Euro, sterling since Brexit referendum	 http//tmsnrt.rs/2ytup0V 

Euro, sterling since Brexit referendum interactive http//tmsnrt.rs/2yv9XwN

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