LCU:Sterling hits 11-month high versus dollar on rates outlook
* Sterling hits 11-month high of $1.6346, 5-year high vs yen
* Strong UK GDP data, business investment help pound
* Keeps expectations intact for UK rate rise in 2015
By Jessica Mortimer
LONDON, Nov 28 (Reuters) - Sterling rose to an 11-month high against the dollar and a five-year high against the yen on Thursday on reinforced expectations that UK interest rates will rise well before those of other major economies.
Figures on Wednesday confirmed the UK economy grew by 0.8 percent quarter-on-quarter, its fastest rate in three years.
Analysts said stronger business investment suggested the recovery was broadening. Bank of England Governor Mark Carney has said a pickup in business investment is crucial if the UK's recovery is to be sustainable.
"The fact that Carney has highlighted this (business investment) is key. It must be something worth looking at in order to see the rate increase in 2015 that sterling investors are looking for," said Sasha Nugent, analyst at Caxton FX.
Sterling rose 0.3 percent to $1.6347, its strongest since early January. Traders said it would face resistance at the Jan. 2 peak of $1.6380, while they reported an options barrier at $1.6400.
Although most market participants do not expect borrowing costs to rise from their record low of 0.5 percent until 2015, this contrasts with the euro zone and Japan, where more easing measures are likely.
In the United States, many analysts do not expect stimulus to be trimmed back until next year.
The euro dipped 0.1 percent to 83.23 pence, with traders reporting euro buying against sterling by companies, which tempered the pound's gains. However, it stayed close to the early November peak of 83.00 pence.
"Sterling is looking more resilient that it did last month," Caxton's Nugent said, adding she expected it to make a sustained break beyond 83.00 pence per euro.
The pound faced resistance at 83.33 pence - equivalent to 1.20 euros per pound and a level at which UK importers often look to sell the UK currency.
Sterling also hit a five-year high against the yen of 167.11 yen, which helped lift its trade-weighted index to 84.4, matching Wednesday's high which was its strongest since September 2012.
