LONDON: Sterling inched higher against a weaker euro on Thursday, with dealers saying events in the euro zone were likely to dominate trade thinned out by the absence of U.S. investors for the Thanksgiving holiday.
The pound had gained on Wednesday after data confirmed the British economy was growing at a healthy pace while reports from the United States suggested growth there might be moderating.
But most analysts read the breakdown of the British numbers, showing investment falling and demand lacklustre, as another sign the UK economy was softening and unlikely to provide the conditions for a rise in interest rates anytime soon.
"We were at a loss to explain the move yesterday after the GDP numbers, the details of which were all pretty bad," said a spot dealer with one large international bank in London.
"I think the best explanation is that people were buying the pound in line with the weaker dollar against the euro. That just looked like some position-squaring before Thanksgiving.
"Today it will all be about the euro zone."
European Central Bank President Mario Draghi speaks on Thursday, a day after Vice President Vitor Constancio said the ECB could make a decision on government bond-buying in the first quarter if the economy did not improve.
Speculation is rife that the bank is moving towards the sort of full scale money-printing carried out by other central banks, and a lower than expected Spanish inflation number weakened the euro early on in Europe.
Sterling rose 0.15 percent to 79.07 pence per euro in early trade, within sight of a two week high. It was steady against the dollar at $1.5790.
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