Sterling little changed; CPI, MPC minutes ahead
LONDON, Oct 15 (Reuters) - Sterling held steady against the dollar and dipped slightly against the euro on Monday, with traders looking to Bank of England minutes and British inflation and retail sales figures later in the week for direction.
Traders will look to these indicators for clues on whether the BoE's Monetary Policy Committee will keep interest rates on hold at 5.75 percent for the next few months, as the futures markets now indicate is likely.
These and other economic indicators come ahead of next weekend's meetings of the Group of Seven finance ministers and central bankers in Washington, where foreign exchange issues -- specifically the dollar's weakness, euro's strength and the rigidity of the Chinese yuan -- could be discussed.
"The data's inevitably going to be a key factor. With the central banks humming and hawing about rates, that's always going to be the case," said Neil Mellor, currency strategist at Bank of New York Mellon.
"There's also the interesting political intrigue surrounding the MPC decision because, quite frankly, they've made a bit of a mess of their communication (over the Northern Rock rescue and response to the credit market crisis)."
At 0745 GMT sterling was unchanged on the day at $2.0355 <GBP=>, in the middle of the rough $2.0250-$2.0450 range that's held for the past couple of weeks.
The euro was up 0.15 percent on the day at 69.69 pence <EURGBP=>, at the upper end of the 68.90-70.20 pence range of the past month, the high end of which was a peak not seen since January 2005.
Analysts generally expect the pound to underperform against the euro as long as financial markets expect the BoE's next move on rates to be a cut and the Euroepan Central Bank's next move to be one last hike.
The minutes for the MPC's last policy meeting will be released on Wednesday, and September inflation data will be released on Tuesday. Economists polled by Reuters expect the annual consumer price rise to edge up to 1.9 percent from 1.8 percent.
British labour market and retail sales data will be released later this week too.
Source supplied by: Reuters