* Graphic: Sterling and gilt yields bit.ly/2dgAXn1
* Graphic: World FX rates in 2017 tmsnrt.rs/2egbfVh
* Graphic: Trade-weighted sterling since Brexit vote tmsnrt.rs/2hwV9Hv
By Ritvik Carvalho
LONDON, July 5 (Reuters) - Sterling edged lower against the dollar on Wednesday as investors awaited a reading of Britain's dominant services sector which could affect the Bank of England's shifting stance on whether to raise record low interest rates.
A number of Bank policymakers including BoE governor Mark Carney have spoken in favour of soon reversing last year's interest rate cut, which came just after Britain's vote to leave the European Union.
The remarks have helped the pound to reverse its 2 percent drop in response to a snap election on June 8 leaving no party with a clear majority.
Inflation has soared past the Bank's 2 percent target, and policymakers will be watching new economic data closely for indications of price pressures.
An interest rate hike would be Britain's first in 10 years.
But surveys of purchasing managers in both the manufacturing and construction sectors for June came in under market estimates, adding to a raft of recent signals that overall economic activity is slowing.
A Reuters poll of economists expects the Markit/CIPS Services Purchasing Managers' Index to come in at 53.5. The data is due at 0830 GMT.
Sterling traded 0.1 percent lower at $1.2904 at 0740 GMT.
It was 0.2 percent lower at 87.99 pence per euro.
"Unless today's data confirms slowing price developments, there is limited scope of investors' central bank rate expectations to fall," Credit Agricole strategists wrote in a note.
"This is especially true as several BoE members, including the central bank's President Carney, indicated that there is little appetite for higher inflation, regardless of intact downside risks to growth." (Reporting by Ritvik Carvalho; Editing by Raissa Kasolowsky)