* ECB expected to announce end of QE, may trim forecasts
* Sterling up after Brexit drama
* Norway's crown rallies on central bank plan for March rate rise
* Graphic: World FX rates in 2018
(Adds new quotes, latest prices)
By Tommy Wilkes
LONDON, Dec 13 (Reuters) - The euro nudged higher on Thursday
after Italy moved to defuse a budget row with the European Union,
although the gains were limited by traders positioning for possible
European Central Bank pessimism on economic growth.
The ECB, which publishes its monetary policy decision at 1245 GMT,
is expected to announce formally an end to its quantitative easing
The focus will be on ECB President Mario Draghi's subsequent press
conference and whether the ECB will trim expectations for and
inflation, as well as any signals on an interest rate rise in late 2019.
Media reports suggesting the ECB will lower its inflation outlook
mean it "may not be reading off the same scoresheet that it
previously had," said Jane Foley, a currencies strategist at Rabobank.
"Our base case is that they stick to their script
(maintaining their growth and inflation forecasts), but if they don't
it will weigh on the euro," she added.
Those concerns meant that Italy's pledging to cut its deficit
target did not boost the euro much.
The euro traded up 0.1 percent at $1.1377 after earlier hitting
$1.1394. It has largely traded in a $1.16-$1.12 range since August,
particularly after the dollar's eight-month rally slowed on signs the
Federal Reserve will stop raising rates sooner than previously expected.
Alvin Tan, a strategist at Societe Generale, predicts euro/dollar
will remain in a tight range into 2019.
"On the one hand, U.S. growth is slowing. On the other, we
have a situation where European political risk remains large and a
cautious ECB," he said.
Against a basket of its rivals, the dollar index slipped 0.1
percent 96.969 .
Signs of easing Sino-U.S. trade tensions and expectations that
China will increase support for its cooling economy helped broader
market sentiment on Thursday.
That spilled into currencies, with the Australian dollar -- a
barometer of China's economic fortunes -- gaining 0.2 percent to
Elsewhere, sterling remained the big story after Prime Minister
Theresa May fought off a bid to unseat her by colleagues unhappy with
her Brexit plans.
May returns to Brussels on Thursday for help in trying to sell a
tweaked version of her much-criticised Brexit agreement to unhappy
colleagues. Sterling was up 0.4 percent to $1.2687
before settling around $1.2650.
The Swiss National Bank kept its ultra-loose monetary policy in
place at a policy meeting. The franc was little changed.
Norway's central bank also kept rates on hold but reiterated its
plans for a March increase, sending the crown up as much as half a
percent versus the euro and the dollar .
The yen shed 0.2 percent to 113.455 and 0.3 percent versus the
euro to 129.10 yen.
China's offshore yuan dipped 0.1 percent to 6.8775 as traders
questioned whether Washington and Beijing will be able to calm
tensions in their trade war.
(Editing by Larry King)