June 5 (Reuters) - Sterling edged up versus the dollar and the euro on Wednesday ahead of key U.S. economic data, while market participants mull over the impact of a potential victory for the Labour Party in next month's general elections.

The UK data calendar is light this week, barring Thursday's release of the Bank of England's (BoE) Decision Maker Panel on inflation expectations.

ING analysts recently argued that they expect one-year inflation expectations to have fallen and remind markets that they are being too conservative in pricing less than two BoE rate cuts this year.

ING expects the BoE to ease its policy three times in 2024.

Investors are currently pricing more than a 50% chance of 25 bps of BoE rate cuts by September while discounting 35 bps by year-end, which means one cut and a 40% chance of a second move in 2024.

The U.S. employment data throughout the week will dominate the macro calendar, after Wednesday's U.S. services data.

Sterling was up 0.1% at $1.2776. It hit $1.2817 the day before, its highest since March 14.

On May 22, Prime Minister Sunak announced that the next UK general election will occur on July 4.

Britain's main opposition party is set to win by a larger margin than in 1997 under former prime minister Tony Blair, opinion pollsters YouGov said on Monday.

"Labour's focus will likely start with ambitious supply-side policies, from planning reform to boosting employment and education," said Sanjay Raja, senior economist at Deutsche Bank, arguing that he expects a Labour government to pay for spending rises with tax hikes.

"Deeper integration with Europe could also boost potential growth, allowing for more spending further down the parliamentary period," he added.

According to a Nomura client survey, "many clients think Labour will pursue closer relations with the EU; nearly 90% of clients think it is likely or very likely."

The euro fell 0.1% at 85.11 pence per pound.

"The pound continued to comfortably outperform the euro in the past month, as markets view a Labour majority as perhaps the most market-friendly outcome of the pending general election," said Matthew Ryan, head of market strategy at global financial services firm Ebury.

Keir Starmer, a 61-year-old former lawyer, has pulled Labour's politics back to the centre ground after a spell of electorally unsuccessful left-wing leadership.

(Reporting by Stefano Rebaudo; editing by Ros Russell)