Sterling jumps above $1.25 in Trump trade slump

* 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, March 27 (Reuters) - Sterling surged almost 1 percent to a seven-week high against the dollar on Monday, gaining with other major currencies after the failure of a Republican healthcare bill weakened faith in U.S. President Donald Trump's other campaign promises.

At the start of a week set to include Britain's formal request to leave the European Union, the pound gained 0.8 percent compared to Friday's close on Reuters' broad sterling quote page, hitting $1.2580, its highest since Feb. 9.

The pound was also up 0.2 percent at 86.42 pence per euro and dealers said record high bets lodged against sterling in recent weeks had helped it outperform currencies including the Australian and New Zealand dollars against their U.S. counterpart.

"The legislative setback for the Trump administration has brought into question the 'Trump reflation trade'," analysts from Credit Agricole (Swiss: ACA.SW - news) said in a morning note.

"The yen (was) the strongest performer in G10 FX (and) the euro and sterling were the next best ... as the most popular long dollar positions got squeezed." (Reporting by Patrick Graham and Jemima Kelly)