* Euro/sterling hits 83.83, highest in nearly 4 weeks * BoE's Posen: economy slightly better but more QE likely * Markets wary before UK GDP data, BoE minutes this week By Jessica Mortimer LONDON, Jan 24 (Reuters) - Sterling fell to its lowest in nearly four weeks against the euro on Tuesday, with sentiment weighed by concerns about UK economic weakness that may prompt further monetary easing from the Bank of England. BoE policymaker Adam Posen said on Monday Britain's economic outlook had improved slightly but more quantitative easing would probably still be needed. Analysts said upcoming data and events could add to concerns about the UK's outlook and the prospect of more QE as austerity measures and spillover effects from the euro zone debt crisis hang over the economy. UK gross domestic product data on Wednesday is expected to show the economy contracted by 0.1 percent in the fourth quarter, which would increase fears the UK economy is sliding into recession. Market players were also wary that a speech by BoE Governor Mervyn King later on Tuesday and Wednesday's release of minutes of the most recent BoE policy meeting may add to expectations that policymakers will opt for more QE next month. UK public finances figures due at 0930 GMT were not expected to have much of an impact on sterling but will be watched for any signs that slow growth is tempering the reduction in the UK's deficit despite tough austerity measures by the government. "We have public finances data, King's speech tonight plus GDP and the minutes tomorrow - there are a number of catalysts that could take euro/sterling higher," said Jeremy Stretch, currency strategist at CIBC. "There is a risk of a negative GDP number and this could raise the risk of sustantial QE down the track." The euro was steady at 83.61 pence, having hit a high of 83.83 pence, its strongest since late December, leaving it on track to target the Dec. 29 high of 84.22 pence. However, traders said offers around 84.00 pence could limit gains. CIBC's Stretch added that, with euro zone flash purchasing managers' surveys coming in above expectations this could support the euro and take it towards 84.20 pence. The euro was broadly supported as hopes of an eventual deal to restructure Greek debt prompted investors to take profit on short positions in the single currency despite euro zone finance ministers' rejection of a debt swap offer by private creditors. Against the dollar, sterling was down 0.15 percent at $1.5551, though it stayed close to a near three-week high of $1.5602 hit on Monday, with traders citing demand for sterling/dollar from Middle East accounts. The pound stayed stuck below the 55-day moving average at $1.5587 and analysts said it could struggle to make a sustained break above $1.5600, particularly if worries grow about the outlook for the UK economy. "Yesterday's up move was contained at the $1.5600 level and 55-day moving average which has contained every cable rally since the end of November," said Michael Hewson, analyst at CMC Markets in a note to clients. In order to extend gains, sterling will need to close above the 55-day moving average and may then target trend line resistance at $1.5670, he said. Latest data from the Commodity Futures Trading Commission showed speculators had extended their bearish positions against sterling. Their net short positions rose to 41,634 contracts in the week to Jan. 17, up from 35,853 contracts a week earlier. (Editing by Catherine Evans)

Source