LONDON, Nov 24 (Reuters) - The pound held steady against

the dollar on Monday, with investors cautious about the currency

ahead of Britain's budget announcement this week.

Finance Minister Rachel Reeves will announce her

long-awaited budget on Wednesday, seeking to reassure investors

that the government can be trusted to be fiscally prudent while

honouring pre-election promises not to raise taxes on working

people.

Sterling last traded at $1.3095, flat on the day

after losing 0.5% last week.

"The potential downside risks for the UK economy related to

the budget are going to keep all eyes on sterling. So that's our

real focus," said Nick Rees, head of macro research at Monex

Europe.

He said the focus would be not only on the announcement

itself but on the overall forecast for the economy, which would

likely trigger a reaction in the pound.

Until then, Rees said markets would "hold fire", noting that

the pound had not reacted on Friday to softer economic data.

That data showed business growth almost ground to a halt

this month and that retail sales had tumbled in October, as a

closely watched gauge of household sentiment also fell.

However, the data did boost traders' expectations of an

interest rate cut next month from the Bank of England. Markets

are currently pricing in nearly a 90% chance of a 25-basis-point

easing.

Elsewhere, the pound was down 0.2% at 88.06 pence per euro

but was firmer against a weakening yen as traders

watched for any signs of official buying from Tokyo to stem the

slide in the Japanese currency.

Sterling was last up 0.2% at 205.22 yen, after last week

rising to its highest since July 2024.