* Sterling regains some ground vs safe haven dollar
* Bank downgrades knock appetite for riskier currencies
* Weale says scope for more QE without inflation worry
By Nia Williams
LONDON, June 22 Sterling steadied against the
safe-haven dollar on Friday, paring losses from the previous day
when a ratings downgrade of the world's major banks knocked
investor appetite for perceived riskier currencies.
British banks Barclays, HSBC and RBS
were among 15 banks downgraded by ratings agency Moody's
Some analysts said the pound may edge higher as traders who
built up long dollar positions in anticipation of the Moody's
downgrade take profits, although concerns about the escalating
euro zone debt crisis were likely to limit investor appetite for
"Against a general backdrop of weaker U.S. data and bank
downgrades the dollar has been stronger and all other major
currencies, sterling included, have been weak," said Michael
Derks, chief strategist at FxPro.
"But traders might be closing out short positions so
sterling and other non-dollar currencies could creep a little
Sterling rose 0.1 percent to $1.5605, with market
players expecting resistance at the 200-day moving average
The euro dipped 0.2 percent against sterling to
80.25 pence. Commerzbank technical strategists said a firm break
below that level would open the door to a test of the 3-1/2 year
low of 79.50 pence hit in May.
Strategists said moves in sterling in coming weeks would be
driven by speculation over whether Bank of England policymakers
will vote to expand the 325 billion pound asset purchase
programme to boost growth at their July meeting.
Policymaker Martin Weale, who voted with the 5-4 majority
against extending the purchases this month, said in a speech on
Thursday that the central bank had scope for more monetary
stimulus without creating inflation risks.
Quantitative easing can be seen as negative for a currency
as it increases the supply of pounds in the system, although
some analysts said signs policymakers would take active steps to
protect the UK economy from the euro zone crisis may be taken as
(Editing by Catherine Evans)