* Sterling slips after hitting one-month high vs dollar
* Euro, U.S. fiscal issue to dictate moves in sterling
* Events next week could help sterling break recent range
By Anooja Debnath
LONDON, Nov 30 Sterling slipped from an earlier
one-month high against the dollar and fell against a firm euro
on Friday, weighed by worries about the U.S. budget and risks of
more policy easing in the UK.
Market players said buying by an Asian central bank earlier
in the session lifted the pound, but month-end demand for euros
corporates and some European central banks, coupled with
concerns about the UK economy, then pushed it lower.
The pound was down 0.1 percent at 1.6017 after
slipping from an earlier high of $1.6062, its highest level
since Nov. 2. Near-term resistance was at $1.6056, its 55-day
Sterling will be swayed by the euro's movements and more
broadly by whether lawmakers can strike a budget deal in the
House of Representatives Speaker John Boehner said on
Thursday that talks on the fiscal dispute had not made
"The focus is really going to be on euro/dollar as it really
drives sterling moves and I will be looking for more comments on
the U.S. fiscal cliff," said Nawaz Ali, UK market analyst at
Western Union Business Solutions.
The so-called "fiscal cliff", a raft of spending cuts and
tax rises due to kick in early next year, threatens to derail
U.S. and global growth and is keeping currencies like the euro
and sterling under pressure.
Along with the euro, the pound typically falls during times
of heightened concerns about the global economy.
The euro was up 0.2 percent against sterling at
81.02 pence, not far from a five-week high of 81.165 pence hit
earlier on Friday.
"Euro/sterling will probably run out of momentum at around
81.20 pence," said Tom Levinson, currency strategist at ING.
A move above there could see it rise towards 81.60 pence but
he warned any reemergence of euro zone debt worries could see
investors resume buying sterling as an alternative to the euro.
Strategists said there were a slew of events next week which
would provide direction to the pound. Apart from the Bank of
England and European Central Bank meetings on interest rates,
the mid-year UK budget update would provide some clarity on the
Bleak economic data has kept the chances of monetary easing
by the BoE, or quantitative easing (QE), alive and this is
likely to cap any rallies in sterling against the dollar. QE is
seen as negative for the pound as it increases its supply.
Traders said events next week had the potential to help
sterling break the recent range of $1.5880-$1.6050
BoE Governor Mervyn King on Thursday flagged an
"exceptionally challenging" environment in the UK economy, a
factor likely to boost the case for a weaker pound to stimulate