CORRECTED - Sterling driven by dlr, euro, but UK data in focus

(Corrects time of Posen speech in 11th para to 1300 GMT)

* Sterling slips vs firmer dlr, gains against euro

* External sentiment drives price action

* Short-term speculators long of pounds, UK data due

By Neal Armstrong

LONDON, Sept 28 (Reuters) - Sterling slipped against a broadly firmer dollar on Tuesday but held its ground versus a softer euro as external drivers dominated price action ahead of key UK data releases.

A report the Federal Reserve was weighing a more open-ended, smaller-scale bond buying programme compared with previous asset purchases supported the dollar while the euro fell as Standard and Poors said the cost of recapitalising Anglo Irish Bank could trigger ratings downgrades. [ID:nTOE68R008] [ID:nWLA3971]

"Sterling is being blown about by external drivers although some focus today will be placed on UK CBI retail sales data which is likely to show a slowdown from a strong reading in August" said Daragh Maher, deputy head of global foreign exchange research at Credit Agricole CIB.

Last month's survey from the Confederation of British Industry showed the fastest rise in retail sales volumes in more than three years. Analysts are expecting a slightly weaker reading for September at 1000 GMT. [ID:nLDE68N1KF]

At 0750 GMT, sterling was trading down around 0.2 percent versus the dollar GBP=D4 at $1.5798 having risen to a 7-week high on Monday at $1.5867.

Traders said selling from Middle East accounts had put early pressure on the pound but this was somewhat offset by demand from an Asian sovereign.

"The short-term market is sitting long pounds and I think we are vulnerable to a pull back to $1.5680 today," said a London-based spot trader.

The euro EURGBP=D4 slipped 0.2 percent to 84.85 pence, retreating from a 4-month high notched last week at 85.77.

Traders said reports that the European Union's annual subsidy to UK farmers would be transacted on Wednesday were likely to support the pound in the near term but further out the euro could be set for further gains.

"Sterling should be a bit of a laggard to the euro as prospects for further quantitative easing in the UK are still on the table," said Credit Agricole CIB's Maher.

Bank of England policymaker Adam Posen is due to speak at 1300 GMT at the Hull and Humber Chamber of Commerce.

The final reading of UK second quarter GDP is released at 0830 GMT, with no revision expected from the second estimate of 1.2 percent.

Separately, Britain is expected to post a current account deficit of 9.75 billion pounds in the second quarter, a slight increase from the previous 9.63 billion deficit.