LONDON, Nov 15 - Sterling was steady against the dollar on Thursday, holding near the previous day's two week lows watching developments in Afghanistan and awaiting British retail sales data at 0930 GMT.
The dollar has been buoyed since the fall of the Afghan capital Kabul on Tuesday.
A report on Wednesday the U.S. had bombed a building in Afghanistan where members of Osama bin Laden's al Qaeda network were gathered, killing a number of people, fuelled rumours the Saudi-born militant had been or was about to be captured.
However, a Taliban spokesman was later quoted as saying the bin Laden had not been captured.
"Sterling continues to be dominated by international developments and there is a bias for the dollar to firm if the (opposition) Northern Alliance strengthens its position in Aghanistan," said Audrey Childe-Freeman, European economist at CIBC World Markets in London.
"However any sharp weakness in retail sales would be negative for sterling."
Economists expect retail sales, a key measure of consumer confidence, grew just 0.1 percent last month. This would leave sales 5.8 percent better than a year earlier.
Sterling stood around 61.20 pence per euro at 0845 GMT, hardly changed from Wednesday's New York close and compared with 10-week highs around 60.95 pence set on Tuesday and matched on Wednesday.
Against the dollar, the pound was little changed from late New York levels around $1.4405 but within half a percent of Wednesday's two-week troughs.
Chartists said there was a chance the pound could head higher against its U.S. counterpart.
"Reaching, overshooting and spiking below the $1.4384 target all turns the focus to the upside for today," said Anders Soderberg, chief technical analyst at SEB Merchant Banking.
"We expect to see the downside protected in the $1.4390 area and will buy a break above $1.4425 for $1.4500/10."
Traders said attention was also likely to fall on a speech by the Chancellor of the Exchequer Gordon Brown at the annual dinner of Institute of Directors later on Thursday.
The speech comes ahead of the November 27 pre-budget report and will be used to return to the theme of boosting Britain's productivity by encouraging more business start-ups, Treasury sources said.