September 8, 2017 / 7:44 AM / a year ago

Sterling holds ground before production data

* Graphic: sterling and gilt yields

* Graphic: World FX rates in 2017

* Graphic: Trade-weighted sterling since Brexit vote

By Patrick Graham

LONDON, Sept 8 (Reuters) - Britain’s pound resisted further losses against a broadly stronger euro on Friday as investors awaited the first big batch of monthly data on the pace of economic growth.

Overall industrial output (0830 GMT) was forecast to have expanded just 0.4 percent on the year in July but, bolstered by a weaker pound, manufacturing is expected to have done better, expanding 1.7 percent.

Neither number, however, is likely to settle the unease which has seen speculators double net bets against sterling in the past three weeks.

A number of major banks have argued this week there is room for a pause in that selling, but the emergence of several forecasts for a fall to parity with the euro underline the risks of the Brexit process for the pound over the next few months.

The euro’s strength after Thursday’s European Central Bank meeting also raised the prospect of more pressure.

“With the ECB seemingly gearing up to reduce its Asset Purchase Programme once again, the risk remains of a fresh rally for the euro into territory (against the pound) it has rarely traded in before,” said Simon Derrick, chief market analyst with Bank of New York Mellon in London.

“The pound faces a number of potential stumbling blocks in the weeks ahead.”

By 0722 GMT, sterling was flat against the euro on the day at 91.76 pence. It gained just over 0.2 percent to $1.3129.

“When it comes to the pound, we believe one cannot exclude additional upside risks, mainly due to the market continuing to run a short position,” Credit Agricole strategists said in a morning note. (Editing by Keith Weir)

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