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UPDATE 2-Sterling slips as investors book profits from recent run

Tommy Wilkes

* Pound heads towards $1.30 after breaching $1.31 this week

* PMI services survey signals stagnating economy

* BoE gave hawkish hone, markets doubt any hike is imminent

* Graphic: World FX rates in 2019

* Graphic: Trade-weighted sterling since Brexit vote (Adds quote, chart, updates with latest prices)

LONDON, May 3 (Reuters) - The British pound fell further from two-week highs on Friday as investors booked profits, doubting the Bank of England would raise interest rates while Brexit remained unresolved.

A survey that showed services businesses barely returned to growth in April had little effect. The IHS Markit/CIPS UK Services Purchasing Managers' Index rose to 50.4 in April from 48.9 in March, just above the 50 reading that separates growth from contraction.

The reading, in line with forecasts, suggested the broader economy was stagnating.

Sterling was also little moved by a relatively hawkish message from the Bank of England on Thursday. Investors remained focused on when, how and on what terms Britain will leave the European Union.

The pound fell to the day's low of $1.2988 as the dollar rallied after better-than-expected U.S. employment data.

The British currency had recovered to $1.3021 by 1350 GMT. It had reached above $1.31 earlier in the week.

Against the euro it was unchanged at 85.76 pence .

The pound's losses over the past two days "have been due mainly to a rebound in the U.S. dollar than weakness in pound, with other GBP crosses remaining near their recent highs," said Fawad Razaqzada, technical analyst at

The BoE said on Thursday that markets should expect interest rates to rise more in the next few years than they currently assume, if the economy grows as policymakers expect and inflation is brought back to target.

Few analysts are convinced the bank will act before Brexit uncertainty is lifted, however.

Trading in the pound has become far less volatile as investors sit on the sidelines while British politicians try to find a way out of a deadlock over Brexit. Britain will not leave the EU until possibly the end of October after London and Brussels agreed a delay.

"We believe that persistent Brexit uncertainty combined with concerns over slowing growth overseas will deter the BoE from delivering a more immediate rate hike. We remain sceptical that cross party Brexit talks between the government and Labour will prove successful," MUFG analysts wrote.

(Editing by Larry King and John Stonestreet)