LONDON, Oct 25 Reuters The British pound extended the previous day39;s losses on Wednesday after gloomy economic data affirmed the view that the Bank of England will likely hold rates steady when it announces its policy decision next week.

Data on Tuesday showed a labour market that was loosening, while the flash reading of the SP Global UK Purchasing Managers39; Index PMI for the services sector fell in October to 49.2, the lowest reading since January and below the 50 threshold that separates growth from contraction.

It39;s obvious there39;s some slowing momentum, said Viraj Patel, global macro strategist at Vanda Research.

You struggle to paint a bullish picture when you have weak macro and a potentially more dovish BoE.

By 0916 GMT, the pound was down 0.2 against the dollar to 1.2132. On Tuesday it fell 0.7, its biggest oneday drop in more than a week.

Sterling was also down 0.1 at 87.21 pence per euro , in close proximity to a 512 month low of 87.40 pence per euro reached on Friday.

The BoE is now likely done with policy tightening and will leave the Bank Rate at 5.25 on Nov. 2, according to the vast majority of economists polled by Reuters.

Money market traders also think UK rates have peaked, with rate cuts fully priced by the end of next year.

Traders had previously priced rates peaking above 6 but a slowdown in inflation and subdued growth had markets paring back expectations.

Headline inflation held steady at 6.7 last month, having reached a 41year…