RTRS:Sterling pares recent gains, holds steady vs euro
* Cable down 0.6 pct vs dollar at $1.5440
* Off a one-week high of $1.5601 as risk appetite suffers
* Pound steady versus euro
LONDON, June 8 (Reuters) - Sterling retreated from a
one-week high against the dollar on Friday as demand for
safe-haven currencies like the greenback revived on worries
about slowing global growth, although losses were checked as it
held its ground against the struggling euro.
Riskier currencies came under pressure after the U.S.
central bank offered no hint of imminent monetary stimulus. Even
the Bank of England opted not to extend its asset purchase
programme a day after the European Central Bank put the onus on
politicians to resolve the festering euro zone debt crisis.
"It looks like the risk rally has run its course for now,"
said Adrian Schmidt, FX strategist, at Lloyds TSB. "Cable
(sterling/dollar) got hurt by the Spanish downgrade and of
course you have the Greek elections coming up next week. For
now, it is very much a ranged trading for cable between $1.5250
and $1.5600."
Sterling was down 0.6 percent against the dollar at
$1.5440, off a one-week high of $1.5601 struck on Thursday when
bets were growing that the Fed would signal more quantitative
easing (QE) and give a boost to risk appetite.
The currency also got a lift from the BOE's decision not to
opt for more QE although expectations of further easing remained
on the table as the UK struggles with a deeper-than-expected
recession.
Investors will keep an eye on producer prices due at 0830
GMT and a sharper-than-expected drop in input prices could give
the BOE more leeway to ease policy in coming months.
Policymakers have said more QE could be on the way if the
situation in the euro zone deteriorates. Fitch cut its rating on
Spain's government debt to BBB, two notches short of "junk"
status, and placed the country on "negative outlook", citing
contagion risks from the Greek crisis.
Against the euro, the pound was flat at 80.88
pence, having risen as high as 81.31 pence on Thursday. This had
taken it close to a one-month peak hit earlier this week.
Many analysts expect the pound to continue to gain against
the euro in the medium term as investors seek alternatives to
euro zone assets.
BNP analysts have recommended investors sell the euro
against the pound targeting a drop to 78 pence in coming months.
They expect the ECB to lower rates in coming months while the
pound is expected to benefit from its status as a safe haven
within Europe.
