LONDON: Sterling steadied on Thursday, having suffered two days of losses, with investors awaiting a key services sector report for more clues on the economy which appears to be stumbling just months before a vote on Britain's future in the European Union.
The pound has lost ground this week, retreating from a four-month high struck on Tuesday, after poor surveys of manufacturing and construction highlighted the economic risks posed by the June 23 referendum on the EU.
The dominant services sector PMI survey is due for release at 0830 GMT and forecasts are for the index to show a reading of 53.5 for April, down from 53.7 a month earlier. A lower number could see sterling weaken, traders said.
Most economists reckon leaving the EU would deal a blow to the British economy, with a hefty current account deficit - 7 percent of GDP in the last quarter of last year - leaving Britain vulnerable to any pull-back in investment flows.
Traders will keep an eye on the mayoral elections in London and where the Labour Party's Sadiq Khan is tipped become mayor, somewhat loosening the ruling Conservatives' hold over Britain's financial centre. Local elections are also being held across Scotland, Wales and northern England.
"We tend to think that sterling looks too strong given the risks ahead of the Brexit referendum.
Sterling/dollar should struggle to break $1.4570/80," said Chris Turner, chief currency strategist at ING.
On Thursday, sterling was steady at $1.4494, well below a four-month high of $1.4770 struck on Tuesday before the manufacturing survey data was released. It was 0.1 percent higher against the euro at 79.14 pence per euro. Investors are cautious about the currency given most polls show a neck-and-neck contest between those campaigning to stay in and those who want to opt out of the European Union.
Despite the closeness of most of the polls, bookmakers have consistently put the "In" campaign well ahead of those who want to leave the bloc. Betting website Betfair shows the chances of leaving at around 32 percent.
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