LONDON, Dec 3 Reuters Sterling gained against the dollar on Tuesday after dovish comments from Federal Reserve Governor Christopher Waller and was steady against the euro as political turmoil in France kept investors on edge.

The pound was last up 0.16 at 1.2678, recovering some of Monday39;s 0.7 loss. In the last three months, the pound has fallen 3.33 against the dollar.

Waller, a U.S. ratesetter, said on Monday that with inflation still forecast to fall to 2, he is inclined at present to support another interest rate cut later this month.

Markets are now pricing in a 70 likelihood of a 25 basis point rate cut at the Fed39;s next meeting on Dec. 18, compared to about 50 just over a week ago.

In Europe, investors remained cautious after French opposition parties from both the farright and the leftwing submitted noconfidence motions against Prime Minister Michel Barnier on Monday.

Barnier will likely face the vote on Wednesday after fierce opposition from across the political spectrum to his budget, which contains painful tax rises and spending cuts aimed at repairing the country39;s precarious finances.

The pound traded flat against the euro at 83 pence after gaining 0.12 on Monday.

Investors are largely expecting the Fed and the European Central Bank ECB to cut interest rates this month but anticipate that the Bank of England BoE will leave UK rates unchanged on Dec. 19.

Fiona Cincotta, senior market analyst at City Index, said the BoE is not showing signs of…