LONDON: Sterling hovered near its lowest in almost five months against the dollar on Wednesday and was seen as vulnerable to more losses before a speech by Britain's Prime Minister, UK jobs data and Bank of England minutes.
Prime Minister David Cameron is set to deliver a speech at 0800 GMT in which he is expected to pledge a referendum on whether Britain should stay in the European Union which will add to uncertainty over the UK's relationship with Europe.
Traders said this could unsettle international investors and hurt sterling, especially as the currency is already under pressure due to worries about the UK economy, which may be highlighted by unemployment numbers due at 0930 GMT.
The pound was down 0.1 percent at $1.5823, edging close to a low of $1.5807 struck on Monday, its weakest since late August last year.
The euro was down 0.1 percent at 84.00 pence, though it was still vulnerable to a test of Tuesday's 11-month peak at 84.405 pence, with analysts saying it risked rising towards 85 pence.
"I think sterling remains vulnerable still," one London-based trader said.
Others were wary, however, saying sterling could be due a temporary bounce higher after falling sharply in recent days.
Bank of England minutes may also weigh on the pound if they highlight a risk of further monetary easing, while the focus remains on data on Friday expected to show the UK economy contracted in the fourth quarter.
BoE Governor Mervyn King said on Tuesday the central bank was ready to restart bond purchases or cut interest rates if it was necessary to boost the economy.
"Today's labour market data will need to avoid being disappointing if we are to avoid another rapid spike higher in euro/sterling to 85 pence and beyond," analysts at Societe Generale said in a note to clients.
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