LONDON: Sterling weakened on Wednesday to near a six-month low against the dollar, with some investors betting on further losses if new central bank chief Mark Carney flags more aggressive policy easing to support the UK economy. Carney, who takes over from Mervyn King as Bank of England governor in July, will testify to a parliamentary committee on Thursday, when the bank will also announce an interest rate decision. Earlier this year, he said monetary policy was not "maxed out" in major economies and there was room to do more. Carney, who is outgoing governor of the Bank of Canada, has also suggested targeting nominal growth rather than inflation, as the British central bank does at present. Investors including some U.S.-based hedge funds have taken his comments as signals that he could lean towards more quantitative easing and stepped up selling of the British pound in recent sessions. Quantitative easing involves printing money and tends to weigh on a currency as it increases its supply. "There is pressure to sell sterling and the market is looking for some kind of policy direction from Carney. One governor is going and another coming and this isn't exactly helping," said Stuart Frost, head at fund managers RWC Capital. "If UK data disappoints, we could see sterling drop in coming months but there is plenty of support at $1.52-$1.53." The pound was down 0.1 per cent on the day to $1.5640, having hit $1.5630 on Tuesday, its lowest in six months. Traders reported option expiries at $1.5630 with bids below that. Option barriers are cited at $1.5600. The euro was down 0.3 per cent at 86.53 pence, taking a breather from a rally which had taken it to a 15-month high of 87.17 pence late last week. The euro has also been weighed down by increased rhetoric from European politicians who are complaining about the adverse impact from a higher currency. Investors are waiting to see if the European Central Bank will also express its discomfort with a firm euro, although chances are pretty slim, given trade-weighted euro has risen by just 3 per cent since early January. ECB chief Mario Draghi will address a press conference on Thursday after a rate decision and is likely to be quizzed about the buoyant euro. The ECB is the only major central bank which is withdrawing some of its unconventional monetary stimulus at a time when the U.S. Federal Reserve, the Bank of Japan and even the Bank of England are either printing more money and expanding their balance sheets or likely to do so in the coming months. Analysts said that while sterling could rally if Carney does not sound as dovish as some are expecting, any bounce is unlikely to be sustained given concerns about the UK economic outlook and risks of a rating downgrade. Data on Wednesday showed British house prices dipped on the month in January, in line with expectation. They rose from a year earlier, but fell short of analysts expectations of a 1.5 per cent rise.

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