Sterling at one-month low on dollar as traders assess UK, US rate paths

LONDON (Reuters) - The British pound nudged down to a one-month low on the dollar on Wednesday, as markets gradually reassess the different interest rate paths of the Federal Reserve and Bank of England.

Sterling touched $1.3570, its lowest since Sept. 12 and was last at $1.3094, down a whisker on the day. It was marginally stronger on the euro at 83.77 pence, well within its recent ranges.

But the near-term future for the pound against the dollar and euro is more dependent on what's happening in the United States and the euro zone than on domestic events.

"There are no important UK economic data nor Bank of England officials scheduled to speak today. As a result, GBP/USD can be driven by the USD trend and changes in risk sentiment," said Kristina Clifton, an economist at Commonwealth Bank of Australia.

The dollar was at a one-month high against a basket of its peers.

Sterling has been under pressure on the dollar since Bank of England governor Andrew Bailey said last week the central bank could become 'more aggressive' on rate cuts if inflation pressures continue to weaken.

That contrasts with the Federal Reserve, where markets have been reassessing the substantial further rate cuts they had seen by year end following last week's much stronger than expected jobs data.

Markets are now pricing an albeit small chance the Fed won't cut rates at all at its November meeting, a contrast to before the jobs data when a 25 basis point move was fully priced in and there was a one in three probability of a larger 50-bp move.

Market expectations that the Fed would cut much more than the Bank of England this year had been supporting the pound for much of this year.

But it is now down over 2% so far in October. The end of the month is still a way away, but if the weakness is sustained that would be its biggest monthly drop in over a year.

(Reporting by Alun John; Editing by Emelia Sithole-Matarise)