By Greta Rosen Fondahn

Jan 22 (Reuters) - The pound rose for a third day to hit a two-week high against the dollar on Wednesday, as a lack of clarity on U.S. President Donald Trump's tariff plans kept a lid on the greenback.

Sterling was last up 0.1% at $1.2376, its highest since Jan. 8 GBP=D3.

The pound initially fell more than 0.3% in early trading, as data showing that Britain borrowed more than expected in December weighed.

But uncertainty around the Trump administration's tariff policies has put pressure on the dollar since Monday, and the U.S. currency continued to edge broadly lower on Wednesday .DXY.

The pound has gained 1.6% so far this week.

Trump did not immediately impose tariffs on U.S. imports on his first day back in the White House, but has said he is considering tariffs of around 25% on Canada and Mexico and around 10% on China from Feb. 1.

He has also vowed duties on European Union imports, without providing further details.

Asked by reporters at the White House on Monday whether he would impose a universal tariff on all imports into the United States, Trump said: "We may. But we're not ready for that yet."

The euro rose 0.14% against the pound to 84.50 pence, having hit its highest since August on Monday at 84.73 pence. EURGBP=D3

Investor concern around Britain's financial outlook has fuelled the pound's around 2% fall against the single currency since the start of the year.

"Prospects of a weaker UK economy and more Bank of England easing still paint a negative picture for sterling this year, even though market concerns regarding UK public finances have sufficiently abated," said UniCredit analysts in a note.

Markets currently price in about 65 basis points of BoE rate cuts this year.

Britain ran a bigger-than-expected budget deficit in December, according to official data on Wednesday, underlining the fiscal pressure faced by finance minister Rachel Reeves.

Public sector net borrowing was 17.8 billion pounds ($22 billion), more than 10 billion pounds higher than a year earlier, the Office for National Statistics said.

($1 = 0.8088 pounds)

(Reporting by Greta Rosen Fondahn; Editing by Amanda Cooper and Kirsten Donovan)

((Greta.RosenFondahn@thomsonreuters.com))