RTRS:Sterling gains ground on dollar, but lags euro
* Cable rises 0.4 pct as safety bid for USDs ebbs
* Euro regains 0.2 pct vs sterling after Tuesday's sell-off
* Stg/Dollar seen unlikely to test $1.61 -SocGen
LONDON, Nov 2 (Reuters) - Sterling firmed against the dollar on Wednesday, recovering some of the previous day's losses as the rally in safe-haven assets waned, supporting a rebound in the British pound.
Sterling clawed back 0.45 percent on the U.S. dollar after sliding 0.8 percent on Tuesday when investors scrambled for the relative safety of dollars after Greece's decision to hold a referendum on its EU bailout.
Cable last stood at $1.6017, towards the upper end of its recent range, but with the Oct. 31 high of $1.6167 unlikely to face a serious test.
"Volatility should fade out of the market today, unless we get another random event out of south-eastern Europe," said Kit Juckes, currency strategist at Societe Generale.
"I'd be surprised if we made it as high as $1.61... we're in a fairly tight range around $1.60 until we get through to events leading up to the weekend."
Commerzbank recommended a short position in sterling targetting $1.5632, the Oct. 18 low, following the recent failure at the 200-day moving average around $1.6140 and which severed the short-term uptrend.
UK construction purchasing managers' index data for October is due to show a marginal decline to 50 from 50.1 in September.
A contraction in UK manufacturing activity on Tuesday saw sterling fall versus the dollar, but Lloyds Bank said weakness in the construction sector is unlikely to have such a pronounced effect.
Markets' focus turns to monetary policy meetings in the U.S. and Europe in the coming days ahead of this weekend's Group of 20 meeting where Europe's escalating debt crisis was expected to be the main subject of discussion.
The euro recovered from the previous day's losses, rising 0.16 percent against the pound to 86.00 pence, having hit a one-month low in the previous session.
Risk-appetite regained some of the ground lost across asset classes with European equities opening higher and demand for safe-haven German debt easing slightly FGBLc1. (Reporting by William James; Editing by Toby Chopra)
