Sterling slips versus dollar after sentiment data, BoE

LONDON: Sterling slipped against the dollar on Thursday, weighed by subdued market sentiment as the previous day's cautious Bank of England policy minutes reminded investors of the British economy's vulnerable position.

Declining risk sentiment gave broad support to the dollar after soft Chinese and euro zone purchasing manager surveys knocked equity markets and the common currency in early European trade.

Minutes from the BoE Monetary Policy Committee meeting released Wednesday showed a surprisingly dovish slant as ratesetters Adam Posen and David Miles pushed for more quantitative easing to try to stimulate the economy.

"I don't think it changes the near-term direction of sterling but it should make it difficult for the currency to rally from here."

Sterling was down around 0.1 percent against the dollar at $1.5850, holding above Wednesday's low of $1.5817. Traders said a clean break below the 200-day moving average around $1.5856 was needed for fresh downside potential.

The pound showed little reaction to what analysts and ratings agencies described as a fiscally neutral UK budget the previous day. Fitch ratings said finance minister George Osborne's proposals showed commitment to deficit reduction and would not impact the UK's AAA rating.

But a strict programme of austerity is likely to weigh on growth and keep investors cautious on the pound.

"The outlook for sterling depends on the economy - it could take a long time for recovery to take root, and sterling probably will only rally when there are signs that's happening. About the best you can say of the budget was that it won't hurt," said analysts at Societe Generale in a note.

The euro was down around 0.2 percent against sterling at 83.03 pence, close to a recent one-month low of 82.83 after the weaker French and German data weighed on the single currency.

Traders were awaiting UK retail sales data for February at 0930 GMT with economists in a Reuters poll expecting a fall of 0.4 percent on the month after a 0.9 percent rise in January.