LONDON: Sterling steadied on Friday ahead of a US payrolls report that could see the pound revisit a 15-month low if more evidence emerges that the US economy is bouncing back more convincingly than Britain's.
In a mixed week of UK data - with the services sector expanding faster than expected but with house prices slowing and mortgage approvals falling - sterling looked set to finish the week at more or less the same level it started at for the third consecutive time.
Sterling was flat against the dollar at $1.5671, close to the 15-month low of $1.5585 hit earlier in the week.
"Until the market gets some more clarity on when the US Federal Reserve tightens or the Bank of England tightens, you wouldn't expect sterling to do very much against the dollar," said Paul Robson, a currency strategist at RBS.
"The Bank of England seems to be not really wanting to prepare the market for some kind of early tightening of policy so you're in this period of data dependency." Against the euro, sterling was up 0.1 percent at 78.89 pence , having posted its biggest losses against the single currency in two weeks on Thursday after European Central Bank chief Mario Draghi poured cold water on those who had been expecting some clearer signal on quantitative easing.
Draghi said the bank would assess the case for more stimulus early next year, and signaled the council would be willing to bypass any minority opposition to buying sovereign bonds if it chose to do so. But that disappointed some investors who had expected stronger groundwork for QE to be laid and had accordingly built bets against the euro.
The BoE, meanwhile, kept its benchmark interest rate unchanged at its historic low of 0.5 percent on Thursday and is now expected to keep it there until late next year or even 2016, offering no relief to sterling, which has fallen almost 9 percent since July as rate expectations have been pushed back.
"The only good news for GBP at the start of 2015 is valuation and large short positions," wrote Citi analysts in a research note.
"In the current environment, sterling/dollar weakness could stretch until the February inflation report.
However reluctantly, we are on the sidelines until data or BoE policy gives a clear direction to sterling, independent of what is happening elsewhere."
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