LONDON, Nov 14 - Sterling extended losses to fresh two-week lows against the dollar on Wednesday as the greenback kept its upbeat tone thanks to developments in the war in Afghanistan.
The dollar lunged higher across the board on Tuesday on news the U.S.-backed Northern Alliance had captured Kabul from the ruling Taliban. The market was eyeing how U.S. October retail sales data due later in the day would influence U.S. equities following Wall Street's sweeping gains in the previous session.
"We had another good day on Wall Street yesterday and that is encouraging people to buy dollars once again," Neil Parker, market strategist at Royal Bank of Scotland Financial Markets said.
At home, investors were eyeing the Bank of England quarterly inflation report due at 1030 GMT. Analysts said data on Tuesday showing receding domestic price pressures suggested the BoE would trim its forecasts for inflation.
"For the inflation report, we are expecting the BoE to cut its forecasts and that is largely priced in," Parker said.
By 0835 GMT sterling was languishing at $1.4402 having lapsed to two-week lows of $1.4388, just shy of its key support around $1.4366, its 200-day moving average. "Short-term trend turns down following the break below the $1.4475 support. This opens the way for a downturn within its $1.4200-1.4680 four-month range," Raynard Cheng, technical analyst at Credit Suisse First Boston said.
Against the euro, the pound was well supported near 10-week highs at 61.05 pence .