Sterling edges down as traders await UK GDP data

By Jemima Kelly

LONDON, July 27 (Reuters) - Sterling slipped against the dollar and euro on Wednesday as traders awaited British second quarter economic growth data, though the backward-looking focus of the numbers meant they were not expected to have a very significant impact on the currency.

The pound has tumbled almost 12 percent against the dollar since Britons voted to leave the European Union last month. Investors are worried that Brexit will have negative consequences for the economy and in particular an already huge current account deficit, which will widen further if investment flows dry up.

The GDP data due at 0830 GMT is forecast to show 2 percent year-on-year growth, but it will only incorporate one week of the period after Britain's vote to leave the EU.

"They (the numbers) do give us an idea of how the economy was set up going into the referendum so they're not completely insignificant," said RBC Capital Markets currency strategist Adam Cole. "But they really are in the shadow of the monthly numbers, which help us build up a picture of what the economy looks like post-referendum."

The pound edged down 0.1 percent to trade at $1.3112 by 0755 GMT. That left it more than 3 cents above a 31-year low hit earlier in the month before it was clear who Britain's next prime minister would be. Against the euro, sterling slipped 0.3 percent to trade at 83.88 pence.

"Sterling would be unable to benefit sustainably even from a surprisingly strong growth figure," wrote Commerzbank (LSE: 21170377.L - news) strategists in a note to clients.

"However, a surprisingly weak result may even increase pressure on sterling as it would provide additional support to speculation about far-reaching BoE (Shenzhen: 200725.SZ - news) easing measures."

Sterling hit a two-week low on Tuesday after Bank of England policymaker Martin Weale said a recent batch of weak UK data would be "very material" for the bank's next policy meeting, having last week said he needed more evidence of economic weakness before backing an interest rate cut.

The BoE surprised markets in July by not cutting the benchmark borrowing cost from its record low of 0.5 percent. But minutes of the decision showed most policymakers expected to back an unspecified package of measures to boost the economy at the Bank's meeting next week.

A Reuters poll published on Tuesday found that while economists almost unanimously expect the BoE to cut rates next week, a slim majority reckon it will hold off on restarting its asset purchase programme for now. (editing by John Stonestreet)