RTRS:Sterling rises vs euro with investors wary of ECB let-down
* Pound strengthens vs euro before Thursday's ECB meeting
* Sterling slips vs dollar as risk sentiment wavers
* Better-than-expected UK data underpins pound
By Nia Williams
LONDON, Sept 5 (Reuters) - Sterling edged higher against a broadly weaker euro on Wednesday, with some investors concerned a widely-anticipated plan by the European Central Bank to tackle the euro zone crisis could fail to meet expectations.
ECB President Mario Draghi is expected is announce a bond-buying programme aimed at bringing down high peripheral sovereign borrowing costs at a policy meeting on Thursday. Strategists said there was scope for disappointment which could boost sterling if the plan lacked detail.
The euro fell 0.3 percent against sterling to 78.95 pence. Technical strategists said a break below 78.80 pence would open the door to a test of the 78.20 pence area, just above the August low.
"The ECB tomorrow is really going to be a case of buying the rumour and selling the fact. That's going to drag the euro lower over the next few months and means we will continue to see some capital flows towards the pound," said Peter Kinsella, currency strategist at Commerzbank.
Sterling fell against the dollar, tracking a pullback in other perceived riskier currencies against the greenback in the run up to the ECB meeting.
The pound dipped 0.2 percent against the dollar to $1.5838, retreating from a two-week high of $1.5910 hit on Tuesday after UK services PMI data, inadvertently released early, came in stronger-than-expected.
There was strong resistance at $1.5912, sterling's highest level since Aug. 23.
Strategists said in the absence of any UK data the pound was likely to track moves in euro/dollar before the ECB meeting.
"With little else on the UK calendar today, sterling/dollar will likely remain dominated by market sentiment, with headline risk possible ahead of tomorrow's ECB meeting," said Lloyds analysts in a note.
The Bank of England also meets on Thursday, but is expected to keep interest rates and its quantitative easing total unchanged.
The pound has been underpinned in recent sessions by some better-than-expected UK data, especially from the manufacturing sector and increasing bets that the U.S. Federal Reserve will launch another round of easing in the coming months.
