Sterling slipped against the dollar on Monday while it held steady versus the euro as investors awaited this week's economic data for clues on the UK interest rate outlook. A lower-than-expected rise in producer prices and a slowing house price inflation had limited impact in a market focused on retail sales data due on Thursday for clues whether the Bank of England is likely to raise interest rates soon.
Relatively high UK rates helped sterling hit a two-month high on the trade-weighted index earlier this month. British finance minister Gordon Brown will present his annual budget on Wednesday. Economists say Brown has little room to play around with on the public finances.
"Sterling is largely driven by the dollar today and it hasn't got independent moves ahead of retail sales and budget," said Adam Cole, senior currency strategist at Royal Bank of Canada Capital Markets.
By 1445 GMT sterling extended early losses to stand down half a percent on the day at $1.9150, moving away from last week's 2-1/2 month high. Against the euro it was steady at 69.86 pence, off an eight-week low of 69.96 pence set last week.
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