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Sterling falls to two-week low on EU vaccine export ban talk

* Graphic: World FX rates in 2020 tmsnrt.rs/2egbfVh

* Graphic: Trade-weighted sterling since Brexit vote tmsnrt.rs/2hwV9Hv

LONDON, March 23 (Reuters) - Sterling fell to a two-week low against the dollar on Tuesday amid talk of the European Union banning vaccine exports to Britain, which relies heavily on imports for its COVID-19 vaccination drive.

After falling far behind post-Brexit Britain and the United States in rolling out vaccines, EU leaders are due to discuss a possible ban on vaccine exports to Britain at a summit on Thursday.

Britain demanded on Monday that the EU allow the delivery of COVID-19 vaccines it has ordered as tensions over a possible export ban on EU-manufactured shots mounted and Brussels pointed an accusing finger at drugmaker AstraZeneca.

Sterling was down 0.5% against the dollar at $1.3802, its lowest since March 9, by 0900 GMT. Against the euro, it traded flat at 86.12 pence.

“One of the reasons why sterling has strengthened this year is the successful vaccine rollout but the UK relies on imported vaccines,” said Lars Sparresø Merklin, senior analyst at Danske Bank.

“There are growing tensions between the UK and the EU, with more and more EU countries considering backing a vaccine export ban to the UK, which may delay the UK’s vaccination plan. We do not think the EU will implement an export ban (because it may turn out to hit themselves as well) but it is a topic to watch.”

Speculators reduced their net long position on the pound versus the dollar in the week to March 16, CFTC data showed. Although the market remains upbeat overall on sterling, the size of the bullish position has shrunk over the past two weeks.

Britain’s jobless rate unexpectedly fell to 5.0% in the three months to January, when the country entered a new COVID lockdown, official figures showed on Tuesday, below forecasts of a rise to 5.2% in a Reuters poll.

Investors will watch the speeches of three Bank of England officials today - Governor Andrew Bailey, Deputy Governor Sir Jon Cunliffe and Chief Economist Andy Haldane.

Reporting by Ritvik Carvalho; Editing by Gareth Jones

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