3 Min Read
* 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 (Reuters) - 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 on Thursday.
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 riskier assets.
"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 higher today."
Sterling rose 0.1 percent to $1.5605, with market players expecting resistance at the 200-day moving average around $1.5749.
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 sterling positive.
Editing by Catherine Evans