Sterling held steady against the dollar and the euro on Wednesday as markets waited for fresh direction before a US rate decision due later in the day. Some analysts said sterling had received a little support earlier in the session as robust demand for a British government bond issue boosted sentiment toward the pound.

But most investors were holding out for the rate decision and Friday's US jobs data, as well as the weekend's meeting of policymakers from the Group of Seven rich nations in London.

At 1515 GMT sterling traded 0.1 percent stronger against the dollar at $1.8859, falling off a session high of $1.8887. Against the euro it hovered around 69.17 pence.

The sale of 375 million pounds of 2.5 percent 2013 index-linked gilts was easily covered at an auction on Wednesday despite some initial concerns that low yields might inhibit demand.

"Sterling had a little bit of a boost this morning - it looks like it was probably on the index-linked gilt auction which had some very good interest," said Ian Stannard, foreign exchange strategist at BNP Paribas in London.

Although a US rate increase has been widely anticipated, the text accompanying the Federal Reserve's decision later in the day will be scrutinised for future interest rate policy clues that could impact the currency market.

Copyright Reuters, 2005