ET:Sterling edges lower versus dollar, seen vulnerable
LONDON: Sterling dipped against the dollar on Friday and looked vulnerable to more losses, with many investors focusing on the relative weakness of the British economy compared with the United States.
U.S. non-farm payrolls at 1230 GMT are forecast to show 200,000 jobs added in March, and analysts said a reading in line with expectations would fuel demand for the dollar against the pound.
Although some traders have been scaling back bets of a strong payrolls reading, the U.S. economy is seen as being in better shape overall than the UK, prompting some speculation the Federal Reserve is considering tightening policy.
In contrast, the recovery in Britain has been more patchy. The Bank of England opted to keep rates and its quantitative easing programme on hold on Thursday, but many market players expect further easing from the central bank once new governor Mark Carney takes the helm in July.
The pound fell 0.2 percent to $1.5205, holding within the $1.5280 to $1.4830 range it has traded in since mid-February.
Analysts said sterling may gain some support following better-than-expected UK services PMI data on Thursday and Japanese investors looking for higher-yielding assets after the Bank of Japan announced aggressive easing measures. But gains would be limited.
"Sterling is going to continue to struggle. It has been reacting to negative data and the BoE is seen as just awaiting Carney before we get the next big policy response," said Ian Stannard, head of European FX strategy at Morgan Stanley.
"Any moves towards $1.53 are going to provide renewed selling opportunities."
Data showing British house prices ticked up in line with expectations in March had little impact on the currency, and strategists said with no other domestic data scheduled for Friday, moves in sterling could be driven by euro/dollar.
"Sterling/dollar looks likely to get dragged by euro/dollar, the $1.5250/70 area should provide resistance on the topside for sterling," Lloyds analysts said in a note.
The euro was close to flat on the day at 84.92 pence, holding above Monday's 2-1/2 month low of 84.11 pence.
European Central Bank President Mario Draghi said on Thursday the bank was ready to cut rates if needed and reaffirmed his commitment to keeping the euro zone intact.
