Sterling took a bit of a breather on Tuesday after a broad rebound in the previous session as investors awaited the outcomes and fresh comments from key central bank meetings later this week.

The Bank of England meets on Thursday and is widely expected to cut interest rates by 25 basis points to 5.25 percent. On the same day, the European Central Bank will also discuss monetary policy, but is expected to keep rates unchanged at 4 percent.

There was little market reaction to HBOS Plc's Halifax survey showing house prices in Britain held steady in January, better than a forecast fall of 0.4 percent on the month.

"Markets are obviously priced for a 25 basis point move and I don't think there has been any momentum developing for a 50 basis point rate cut. There did seem to be some of that last week," said Steve Barrow, currency strategist at Bear Stearns.

The pound eased 0.1 percent against the dollar to $1.9705 by 0836 GMT, while the euro was down just 0.2 percent at 74.99 pence. Versus the Japanese yen, sterling edged up 0.3 percent to 211.22 yen.

Sterling had suffered a sharp fall last Friday after weak UK manufacturing sector data cemented expectations for more rate cuts, but has staged a recovery this week as investors pared bets against the currency.

The market focus is now on UK services data, due at 0930 GMT, which is expected to show the British service sector slowing in January. The index is forecast to ease to 52.0 from 52.4.

Sourced by Reuters.