* Graphic: World FX rates in 2020 http://tmsnrt.rs/2egbfVh
* Graphic: Trade-weighted sterling since Brexit vote http://tmsnrt.rs/2hwV9Hv (Adds charts, quotes, updates rates)
By Joice Alves
LONDON, Jan 13 (Reuters) - Sterling hit a seven-week high against the euro on Wednesday, building on gains during the previous session when the Bank of England's governor dismissed negative rates, while optimism over the pace of Britain's vaccination rollout also offered support.
With the economy facing a third national lockdown, Governor Andrew Bailey said there were "lots of issues" with cutting interest rates below zero, which could hurt banks and potentially reduce their lending to companies.
Sterling was up 0.3% against euro at 89.05 pence by 11.51 GMT, after earlier trading at 88.97 pence, its strongest level against the single currency since Nov. 25.
"Markets adjusting to Bailey rolling back views on monetary policy is a driver. Secondly, the UK is pulling ahead on vaccinations so this has shifted the UK economic underperformance narrative a bit," said Geoffrey Yu, senior EMEA market strategist at BNY Mellon.
Against the dollar, the pound flattened to $1.3667, after briefly touching a nine-day high of $1.37.
Following the completion of a Brexit trade deal in December, investors have turned their attention to Britain's economy and its COVID-19 vaccination campaign.
Britain is in a race against time to roll out the inoculation programme, Prime Minister Boris Johnson said, as deaths hit record highs and hospitals ran out of oxygen, and his top medical adviser warned the pandemic's worst weeks were near.
Deliveries of COVID-19 vaccines to Britain are on track and sufficient to meet the government's vaccination targets, Health Secretary Matt Hancock said, referring to a government goal to offer a vaccine to all over 70s, extremely vulnerable people and health care workers by Feb. 15.
Negative rate talks could make a come back later on in the year, analysts said.
Market pricing shows investors expect negative rates in June. Before Bailey's comments, those expectations were for May.
"Negative rates would almost be like a steroid injection for the UK economy after it has been vaccinated," said Simon Harvey, FX analyst at Monex Europe.
(Editing by Barbara Lewis, Kirsten Donovan)