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UPDATE 1-Sterling resumes slide to hit new two-week low vs dollar

* Graphic: World FX rates in 2018 http://tmsnrt.rs/2egbfVh

* Graphic: Trade-weighted sterling since Brexit vote http://tmsnrt.rs/2hwV9Hv (Adds quote, details updates prices)

LONDON, Feb 6 (Reuters) - Sterling resumed its slide on Tuesday, hitting new two-week lows against a broadly stronger dollar even though investors remained wary of selling it down too far before this week's Bank of England meeting.

Currency markets have been relatively calm compared with equity markets which are suffering their fourth straight day of falls, with Britain's FTSE index down almost 2 percent and lower for the sixth day in a row.

But with the dollar recovering from early lows, sterling fell 0.6 percent, trading below $1.39 for the first time since Jan. 22. It has now fallen around 3 percent since peaking at $1.4346 on Jan. 25 and is down 2.7 percent since Friday -- its worst three-day performance since October 2016.

Versus the euro, sterling dropped 0.3 percent to a three-week low of 89.00 pence.

The currency has been hurt by the general flight from risk and also weighed down by this week's surveys confirming the poor shape of Britain's economy and fresh tensions over its divorce negotiations with the European Union.

Economic growth is likely to slow to 0.3 percent in the first quarter, down from 0.5 percent in the last three months of 2017, financial data firm IHS Markit said.

And the European Union's Brexit negotiator bluntly called on the British government to clarify what it expected its relationship with the EU to be after Britain leaves in March 2019. Without a customs union and outside the single market, barriers to trade are inevitable, Michael Barnier said.

"UK data showing weaker service sector output yesterday and only modest growth in retail spending have not helped sterling sentiment but the real driver of weakness has been broader market volatility," Shaun Osborne, chief currency strategist at Scotiabank, told clients.

"Soft-ish data and ongoing focus on domestic political risks as PM May tries to steer her Brexit policies through parliament may drag on sterling's performance near-term," he added.

But sterling traders will also be wary of big bets before the Bank of England's policy meeting on Thursday.

While the Bank is expected to leave interest rates unchanged, many analysts are now predicting a rate rise in May, especially after BoE Governor Mark Carney recently sounded a more upbeat tone on the economy.

The BOE also releases its inflation report on Thursday.

Earlier forecasts had been for a November rate move.

Carney has said wage growth was finally picking up and that the focus of the BoE is shifting back to tackling above-target inflation. Analysts reckon any further positive forecasts on the economy might prompt investors to add positions in the undervalued currency.

ING analysts predicted more sterling upside in the medium-term, having revised their end-2018 forecast to $1.45.

They cautioned however that "even if this weeks BoE meeting provides a hawkish tilt and global risk sentiment stabilises, we think any material upside will not be realised until markets have clarity on a Brexit transition deal."

That was unlikely until closer to the 22-23 March EU leaders summit, they added.

(Reporting by Saikat Chatterjee, Tommy Wilkes, Sujata Rao; Editing by Catherine Evans)