LONDON, June 25 (Reuters) - The pound was one of the

better performing major currencies on Tuesday, as a sell-off in

the stock market and jitters around politics on both sides of

the Atlantic drove more investors towards the comparative safety

of the U.S. dollar.

Sterling was last up 0.1% at $1.27, compared with

declines in the value of the euro and yen.

The pound was trading around its highest in 16 years against

the yen, which has weakened against the dollar

towards levels last seen in April that triggered

official Japanese buying to support it.

Against the euro, the pound strengthened 0.1% to

84.51 pence, nearing last week's almost-two-year high.

A 10% sell-off in shares of megacap Nvidia ( NVDA ) over the

last two trading days has unsettled investors, driving more

flows into the likes of government bonds and the dollar.

Meanwhile, with a general UK election due on July 4, Bank of

England policymakers are unlikely to give any new steer on where

interest rates might head. Traders are pricing in roughly two

rate cuts this year, with around a 55% chance of the first one

coming in August.

This is in line with market-based expectations for the

Federal Reserve, which has said it only sees the need for one

U.S. rate cut this year.

"Looking at forward curves, it is remarkable that UK

interest rates remain priced so close to the U.S.," ING

strategist Chris Turner said.

"Our conviction view this summer is that UK rates will be

re-priced lower starting with a rate cut in August. And this

should lead to a lower pound," he said.

A recent Reuters poll of analysts offers a median

three-month forecast of $1.26 for sterling, about 0.8% below

current levels.