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* Pound edges up vs dollar, flat vs sterling
* Graphic: World FX rates in 2021 http://tmsnrt.rs/2egbfVh
* Graphic: Trade-weighted sterling since Brexit vote http://tmsnrt.rs/2hwV9Hv
(Updates prices)
By Tom Wilson
LONDON, April 8 (Reuters) - Sterling steadied against the
dollar and euro on Thursday, recovering after a bruising bout of
profit-taking earlier in the week.
The pound fell 1.2% against the dollar and 1.7% against the
euro between Tuesday and Wednesday as investors took cash off
the table after a strong first quarter for the British currency.
But by 1500 GMT on Thursday, sterling was up 0.15% against
the dollar at $1.3760, after touching its lowest this
month earlier in the day as the dollar traded near its lowest in
two weeks versus major peers.
Against the euro, the pound fell 0.1% to 86.49 pence per
euro, following two days of losses against the
single currency since September - a fall traders said was
amplified by a squeeze of euro-pound short positions.
Traders were largely optimistic over the pound's near-term
prospects after a strong start to the year. But some urged
caution as markets have already priced in positive news for
sterling.
Sterling's pullback was "exaggerated," ING analysts wrote,
adding that they were "constructive" on the pound, citing
Britain's relatively fast COVID-19 vaccine programme.
Expectations of an economic rebound in Britain, spurred by
rapid vaccinations, helped sterling to record its best quarter
since 2015 versus the euro. Falling expectations of negative
interest rates also helped.
Britain has surged ahead of the rest of Europe in the race
to inoculate its population, with almost half of its citizens
receiving a first dose. But supply issues from its main
Oxford-AstraZeneca vaccine have slowed progress in
recent days.
Some market players said the pound may struggle to maintain
its strong start to the year.
"We are starting what's likely to be much more challenging
quarter for sterling," said Adam Cole, chief currency strategist
at RBC Capital Markets, with positive news on vaccines and the
lower risk of negative rates already priced in.
Others said Britain's economic performance in the next
quarter would be a key factor. With infection numbers falling, a
planned partial re-opening of the economy is due next week.
"For there to be follow through, we actually need to see the
data outperform even expectations," said Stephen Gallo, European
head of FX strategy at BMO Capital Markets.
(Reporting by Tom Wilson;
editing by Mark Heinrich, Chizu Nomiyama, Larry King)
