Sterling set for biggest daily drop in 3 weeks on weak survey data

* Graphic: World FX rates in 2019 http://tmsnrt.rs/2egbfVh

* Graphic: Trade-weighted sterling since Brexit vote http://tmsnrt.rs/2hwV9Hv (Adds quotes, details)

By Saikat Chatterjee

LONDON, Nov 22 (Reuters) - The pound weakened on Friday and is set for its biggest daily loss in nearly three weeks after surveys showed British business suffering its deepest downturn since mid-2016, with caution rising before a Dec. 12 general election.

The first "flash" reading of the IHS Markit/CIPS UK Purchasing Managers' Indexes (PMI) for Britain showed that declines in both the services and manufacturing sectors quickened in November.

"UK PMIs showed a deeper contraction than anticipated in the manufacturing sector, which is another indication of something we all know – the UK economy is faltering," said Adam Seagrave, head of global sales trading at Saxo Markets.

The survey, closely watched at the Bank of England, adds weight to the views of two of its nine monetary policymakers who earlier this month voted for an interest rate cut.

The pound's losses were exacerbated by some repatriation-related flows by U.S. firms, which were converting their pound proceeds into dollars before the end of the year, according to a sales trader at a Japanese bank in London.

Versus the dollar, the pound fell nearly 0.5% to $1.2840, its biggest loss since Nov. 4, according to Refintiv data, as investors moved to the sidelines before the weekend.

Investors are adopting a wait-and-see attitude before the election, at which voters face a stark choice: a socialist vision pushed by opposition leader Jeremy Corbyn, including widespread nationalisation and free public services, or Prime Minister Boris Johnson's drive to deliver Brexit within months and to build a "dynamic market economy".

Before the PMI survey knocked the pound lower, the British currency had been trading in a tight $1.2888-1.2985 band this week, its smallest weekly range since July 2014, according to Refinitiv data.

"The choices are arguably poor from a market point of view," said Marie Owens-Thomsen, chief economist at wealth manager Indosuez, speaking of the choice between Johnson and Corbyn.

"With a large majority for Boris, we would probably increase the probability of leaving perhaps even without a deal; while a large majority for Corbyn would have the potential for lots of non-market friendly economic policies. So that’s not a good solution either," she said.

Against the euro, the British currency slipped 0.3% to 85.95 pence.

(Reporting by Saikat Chatterjee; Additional reporting by Jeremy Boulton and Elizabeth Howcroft; Editing by Nick Tattersall and Mark Potter)