Sterling steadied against the dollar in thin trade on Friday, supported by early demand from Asia, though the pound still hovered close to three-month lows and was hampered by a fragile outlook for the UK economy. Trading conditions were thin and volumes light, with most investors on the sidelines and many European centres closed for Christmas holidays. US markets are also shut on Friday.
Traders said persistent Asian demand pushed the pound to the day's high of $1.5477 in early London dealing. It later eased to $1.5438, close to unchanged on the day. Sterling was hovering above a three-month low of $1.5356 hit on Tuesday. Technical analysts said a clean break below the 200-day moving average at $1.5393 would be key for further losses.
The euro was close to unchanged at 84.92 pence, holding below a three-week high hit last week of 85.53. The pound has been under pressure as higher-than-expected unemployment data and softer-than-forecast growth in the economy cloud the economic picture into 2011.
"I see lots of risks to the outlook for sterling going forward," said Kenneth Broux, Market Strategist at Lloyds Banking Group. Denting sentiment were comments made on Thursday from Bank of England policymaker Paul Fisher, who said the economy could suffer another period of contraction next year.
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