* Graphic: World FX rates in 2020 http://tmsnrt.rs/2egbfVh
* Graphic: Trade-weighted sterling since Brexit vote http://tmsnrt.rs/2hwV9Hv
LONDON, Sept 1 (Reuters) - The British pound scaled new
eight-month highs on Tuesday above $1.34 as broad-based dollar
weakness deepened in the wake of the Federal Reserve's new
policy framework that suggests U.S. interest rates will remain
at record lows for the foreseeable future.
However, gains were capped ahead of a mid-week speech by
Bank of England Governor Andrew Bailey, just before the central
bank's next monetary policy announcement.
The pound strengthened 0.3% to $1.3411, its highest
level since mid-December 2019, while it rose 0.02% against the
euro to 89.31 pence.
"It's still a weaker dollar that is lifting cable," MUFG
strategist Lee Hardman said.
Last week, Bailey said the Bank of England appears to get
the most bang for its bond-buying bucks if it goes "big and
fast" at times of crisis and it has plenty of ammunition to
support the UK economy through its coronavirus
Since becoming governor in March, Bailey has overseen a 300
billion-pound ($399 billion) expansion of the BoE's bond-buying
programme - taking it to 745 billion pounds - and has cut its
key interest rate to a record low 0.1%. The central bank is
expected to expand its bond purchase plan in the autumn.
In a sign that the pound's gains have been driven by the
dollar's weakness, the UK currency's performance versus the euro
and the Japanese yen has been largely rangebound.
Reports about impending tax increases in the UK, to offset a
surge in public spending during the pandemic, failed to check
the pound's gains.
Media reports on Sunday suggested British finance minister
Rishi Sunak was considering sweeping tax increases to ease
public debt, which passed 2 trillion pounds ($2.7 trillion)
after emergency spending amid the coronavirus pandemic.
MUFG's Hardman said the tax rises were for a later date.
"Right now would be a more risky proposition for the
government to go down that route when the recovery is not yet on
a solid foundation."
(Reporting by Maiya Keidan; Editing by Saikat Chatterjee and