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* Chart: Global exchange rates in 2018 tmsnrt.rs/2egbfVh
* Chart: Trade weighted Sterling since Brexit vote tmsnrt.rs/2hwV9Hv
LONDON, Sept. 6 (Reuters) – Sterling edged up Thursday but stayed well below the highs of the previous session due to uncertainty over Brexit negotiations.
The British currency rose slightly by 0.1% to $ 1.2922, but remained well below its three-day high of $ 1.2983 at the previous session. Against the euro, it has risen by a similar margin to 90.05 pence.
"Brexit trading is at the center of the markets and, despite yesterday's headlines, short-term uncertainty will persist," said Valentin Marinov, Head of G10 FX Strategy at Credit Agricole in London.
Bloomberg reported on Wednesday that the German and British governments had abandoned Brexit's key demands, potentially facilitating a divorce deal, pushing the UK currency up against the euro and the dollar.
But the news that German Chancellor Angela Merkel's government was preparing for all Brexit scenarios, including an agreement without agreement, after her government approved a draft law on transition after leaving the European Union , prompted investors to take profits.
The UK currency remains one of the shortest among major currencies, as is the yen and the Swedish krona, and any slightly positive advance in the Brexit negotiations is likely to provoke a strong market reaction.
Trade concerns also weighed on sentiment after US President Donald Trump threatened new tariffs on Chinese imports worth $ 200 billion.
Chinese equities were in the red as Beijing said it would be forced to retaliate if the US applied new tariff measures. (Report by Saikat Chatterjee Editing by Gareth Jones)
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