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Sterling awaits direction from Jackson Hole speech, dollar caps gains

LONDON (Reuters) - The British currency held steady on Wednesday against the U.S. dollar and rose slightly versus the euro, as Brexit uncertainty kept traders on the sidelines.

FILE PHOTO: British Pound Sterling banknotes are seen in a box at the Money Service Austria company's headquarters in Vienna, Austria, November 16, 2017.REUTERS/Leonhard Foeger

This week’s biggest scheduled event is Bank of England Governor Andrew Bailey’s speech at Jackson Hole on Thursday.

Beyond that, analysts said there were few factors to provide direction for the currency.

“Sterling price action for the remainder of the week will be almost exclusively determined by external developments, given a bare data calendar at home,” FX analysts at Scotiabank wrote in a note to clients.

“It won’t get much better next week, when Markit PMI revisions are the only remotely notable print scheduled for release,” they said.

Sterling was steady at $1.3155 and rose 0.2% to 89.84 pence against the euro.

The British currency has been dragged higher in recent weeks by a weakening U.S. dollar.

Some analysts expect a correction as sterling factors in the risk of a no-deal Brexit, as well as of high unemployment after the government’s furlough scheme ends in October.

Britain is struggling with a debt-to-GDP ratio above 100% and a double deficit, which could erode investors’ confidence in the country.

The threat of a second wave of the novel coronavirus is also influencing trade as virus hotspots emerge across the world, sparking instant government responses, such as two-week quarantines.

Reporting by Olga Cotaga; editing by Barbara Lewis

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