UPDATE 1-Sterling stems losses versus dollar, euro after hard profit-taking knock

* Graphic: World FX Rates in 2021 http://tmsnrt.rs/2egbfVh
* Chart: trade-weighted pound sterling since the Brexit vote http://tmsnrt.rs/2hwV9Hv (updates prices, adds comments)
By Tom Wilson
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LONDON, April 8th (Reuters). The pound sterling stabilized against the dollar and euro on Thursday, quenching losses after a bloody profit-taking. After a strong start to the year, traders were optimistic about the near-term outlook.
The pound fell 1.2% against the dollar and 1.7% against the euro between Tuesday and Wednesday as investors pulled cash off the table after a strong first quarter for the UK currency.
But through Thursday's 1100 GMT, the pound was unchanged against the dollar at $ 1.3741, off its lowest level for the month, with the greenback on the rearfoot against major competitors.
Against the euro, after its worst day against the single currency in five weeks, the pound rose 0.1% to 86.30 pence per euro.
ING analysts wrote that the pound sterling withdrawal was "excessive" adding that they "remain constructive on the currency", citing the UK's relatively quick COVID-19 vaccination program.
Britain is ahead of the rest of Europe in the race to vaccinate its population, and nearly half of its citizens are receiving a first dose. However, supply problems with the main Oxford-AstraZeneca vaccine have slowed progress in recent days.
Expectations of an economic recovery in the UK, fueled by rapid vaccinations, helped the pound sterling to have its best quarter since 2015 against the euro. Declining expectations of negative interest rates also helped.
Still, some market participants said the pound may struggle to maintain its strength.
"We are starting what is likely to be a much more challenging quarter for sterling," said Adam Cole, chief currency strategist at RBC Capital Markets, with positive news on vaccines and the lower risk of negative interest rates already priced in.
Others said the UK's economic performance over the next quarter was a key factor. If the number of infections falls, a planned partial reopening of the economy is planned for next week.
"For this to happen, the data has to exceed expectations," said Stephen Gallo, European head of FX strategy at BMO Capital Markets. (Reporting by Tom Wilson editing by Mark Heinrich and Chizu Nomiyama)
In this article:
USD = X.
EUR = X.
+ 0.0354%
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