LONDON, May 1 Reuters The pound held steady on Wednesday as traders waited for the Federal Reserve39;s interest rate decision later in the day for hints about when U.S. borrowing costs might start to fall.

Sterling was last effectively unchanged from Tuesday at 1.2488, after falling 0.55 the previous day as the dollar rallied on the back of strong U.S. economic data.

The euro was also roughly flat at 85.46 pence, within the tight range it has traded in since the start of the year.

Global markets were relatively subdued, with traders off for May Day or International Workers39; Day in many countries.

The Fed announces its decision at 2 p.m. ET 1800 GMT and is widely expected to leave rates at 5.25 to 5.5. Investors39; focus will be on Chair Jerome Powell39;s comments on the recent string of strongerthanexpected economic data, which could influence the dollar and global currency markets.

Data on Tuesday showed that growth in U.S. labour costs accelerated in the first quarter of the year, sparking a rise in U.S. bond yields and the dollar that weighed on sterling, the euro and other major currencies.

The pound has fallen 1.9 this year as the dollar has risen, although it has outperformed the euro39;s 3.4 drop thanks partly to a stronger economy and price pressures.

Traders on Wednesday pushed back their expectations for the first Bank of England interest rate cut so that they no longer fully expect one by September, in the wake of Tuesday39;s U.S. data.

Analysts say…