LONDON: Sterling struggled to make significant gains against the dollar and the euro on Thursday with investors refraining from betting on further pound strength barring more evidence of the British economy recovering.
The Band of England's Monetary Policy Committee was expected to keep interest rates unchanged at historic lows with no changes planned to its asset-buying programme when its decision is announced at 1100 GMT.
Industrial and manufacturing output figures for March, due at 0830 GMT, will be watched for hints on whether the economy can maintain the momentum from stronger-than-expected business survey data last week.
Below-forecast data could leave the pound vulnerable, while upbeat numbers could nudge it towards recent highs.
"Sterling is sensitive to data surprises, so if the industrial and manufacturing data come in above 0.5 percent, that could have a positive impact, I am not saying sterling will break above $1.56 but it could certainly take us towards that level," said Kathleen Brooks, research director at FOREX.com.
Sterling was up 0.1 percent at $1.5546, but still short of its recent two-month high above $1.56. Support for the pound was cited at $1.5521, its 100-day moving average.
Britain avoided a triple-dip recession last quarter and recent better-than-forecast economic data was expected to keep the BoE sidelined for another month.
"We are not expecting any action from the BoE today, especially given the recent positive UK data surprises, which appear to have dampened the QE debate," analysts at Morgan Stanley said in a note. They see any recovery in the pound as an opportunity to sell it.
The euro was down 0.1 percent at 84.57 pence, but holding above a 3 1/2-month low of 83.98 pence hit on April 26. Strategists cited resistance around 84.80 pence, its 100-day moving average.
A Reuters poll on Wednesday showed strategists expect the pound to ease to $1.53 in a month and $1.49 in six and 12 months.
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