LONDON: Sterling rose to its highest in more than a week against a broadly weaker dollar on Thursday on month-end buying and after softer US economic data.
But the pound touched its lowest in six weeks against the euro, while traders expected the currency to stay weak due to concerns incoming Bank of England governor Mark Carney could favour more monetary stimulus when he takes up the post in July.
Sterling was up 0.5 percent against the dollar at $1.5211 , having hit $1.5218, its strongest since May 21, with traders saying stop loss buy orders were triggered above $1.5200.
But the euro, which was also helped by month-end demand, rose by 0.4 percent to hit 85.985 pence, a shade above last week's peak of 85.97 pence, marking its strongest since April 17. It was last at 85.79 pence.
"We've had quite a flow-driven day because of month-end ... there's not been much on the fundamental side," said Elsa Lignos, currency strategist at RBC.
Analysts said US data showing the economy grew at a slightly softer pace in the first quarter and a rise in weekly jobless claims weighed on the dollar as it slightly reduced the chances of an early exit from Federal Reserve monetary easing.
But many analysts expect the pound to trade lower over the coming weeks due to the likelihood of tighter monetary policy in the United States combined with uncertainty about what stance Carney will take.
"If you look at how much a change in leadership has affected policy at the Bank of Japan and the European Central Bank it could be a painful month for sterling," said Nawaz Ali, market analyst at Western Union Business Solutions.
Societe Generale analysts forecast the pound to fall to $1.40 by year-end. "A lower inflation profile provides greater scope for the BoE to act more to support the still-tentative economic recovery," they said.
UK economic data recently has been mixed, with housing data improving but retail sales falling. The next key UK data will not come until purchasing managers' surveys are released next week, which will give details on UK private sector activity in May.
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