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Sterling stabilises after biggest drop in a month

* Graphic: sterling and gilt yields http://bit.ly/2dgAXn1

* Graphic: World FX rates in 2017 http://tmsnrt.rs/2egbfVh

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

LONDON, Dec 11 (Reuters) - Sterling steadied on Monday after posting its biggest daily drop in more than a month on Friday as investors cautiously added some long bets in a week when Britain and the European Union will sign off on a deal to move to the next stage of Brexit talks.

The British currency was choppy in early trading in a potentially big week with a central bank meeting scheduled on Thursday and a raft of top tier data including retail sales, inflation and jobs data also due this week.

With latest positioning data showing a growth in long sterling bets for a third consecutive week after Prime Minister Theresa May managed to break the Brexit deadlock last week, investors have become a bit more optimistic in the short term

Some analysts such as Viraj Patel, an FX strategist at ING in London, say the central bank decision this week will be closely watched to see whether policymakers will acknowledge the developments in the Brexit negotiations.

"While we suspect the statement will be largely unchanged, it'll be interesting to see whether the monetary policy committee explicitly acknowledge the recent Brexit progress," said ING's Patel.

"If so, one could see this as a hawkish development with risks sterling moves up to 1.3500/50."

Sterling was broadly steady against the dollar at $1.3375 after falling 0.7 percent on Friday, its biggest daily drop since Nov. 2. Sterling had skidded when cautious investors booked profits after a sharp rally in previous days.

Against the euro, sterling weakened by 0.3 percent to 88.15 pence in early trade on Monday. (Reporting by Saikat Chatterjee)