Sterling slipped from a five-week peak against the dollar on Monday, with investors wary of pushing the pound higher in case forthcoming UK activity data is weaker than expected. Sterling was last at $1.6285, having struck a five-week high of $1.6345 in the Asian session on heightened worries about a US debt default.
Traders said sterling above $1.63 looked vulnerable to a downside correction, especially if second quarter gross domestic product (GDP) on Tuesday disappointed. Britain's economy is expected to have grown at 0.2 percent over the previous quarter, but a bad number could boost expectations of more monetary stimulus from the Bank of England.
Last week the pound posted its best weekly performance since May against the dollar as investors cheered a eurozone deal on Greece, but analysts said it looked poised for a selloff. The euro was 0.2 percent higher at 88.13 pence, with near term resistance at 88.54 pence - the high struck on Friday. Resistance levels beyond that include 88.85 pence, its 21-day moving average, and 88.95, the 50 percent retracement of euro's fall from 90.84 on July 1 to a low of 87.06 in mid-July.