* UK services PMI due at 0828 GMT * BoE expected to opt for further QE on Thursday * Trade seen subdued on U.S. holiday and before BoE, ECB meet LONDON, July 4 (Reuters) - Sterling dipped against the dollar and was steady versus the euro on Wednesday before a survey on UK services sector activity, which was expected to show further weakness in the economy. The market forecasts the Bank of England will opt for more quantitative easing when policymakers meet on Thursday but the impact on the pound is expected to be limited as the decision has been widely anticipated. Analysts expected trading in the pound to be subdued on Wednesday, with volumes thin due to a public holiday in the United States and many investors sidelined before the BoE decision and a European Central Bank meeting on Thursday. A purchasing managers' survey (PMI) due at 0828 GMT was expected to show the services sector activity index falling to 52.8 in June from 53.3 in May. "I expect the PMI will slow a little, which would not be a great sign for UK GDP, but with QE already priced in the data is unlikely to be too interesting," said Richard Driver, analyst at Caxton FX. A weak PMI number would add to concerns about the fragility of the UK economy, especially after weak surveys on manufacturing and construction earlier this week. But even a firmer-than-expected reading would not dent expectations that the BoE will vote on Thursday to increase asset purchases under its quantitative easing (QE) programme by a further 50 billion pounds, analysts said. Sterling was down 0.2 percent against the dollar at $1.5657, tracking a dip in the euro versus the dollar and staying stuck below its recent high of $1.5723. Traders said a reportedly large options expiry at $1.5670 could influence trade during the day and keep the pound trading close to that level. The euro was steady at 80.30 pence, staying within reach of a low of 79.85 struck late last week. Caxton's Driver expected any gains in sterling against the dollar to be capped around $1.5700 but continued to expect the euro to fall back below 80 pence. More QE would usually be seen by the market as negative for a currency. However, many analysts expect the pound will continue to gain versus the euro as worries about the euro zone debt crisis offset looser UK monetary policy. The European Central Bank is also widely expected to cut rates by 0.25 percent on Thursday, which will also weigh on the euro. Sterling's falls against the dollar may also be limited if growing concerns about the weakness of the U.S. economy increase expectations that the Federal Reserve will also soon opt to expand quantitative easing. However, Citi analysts said sterling was likely to fall against growth-linked and higher-yielding currencies like the Australian and Canadian dollars . A BoE decision to expand QE by 50 billion pounds "could be seen as largely neutral", while an expansion by 75 billion pounds (as Citi analysts expect) should be a "small sterling negative as a kneejerk reaction", Citi said. (Editing by Susan Fenton)

Source