RET: Sterling at 5-1/2 mth high vs weak dlr; PMI ahead
* Sterling hits $1.5783
* Euro falls to near 4-week low; TWI sterling at 1-mth high
* Stg helped by higher equities, risk appetite; PMI awaited
LONDON, Aug 2 (Reuters) - Sterling rose to a five-and-a-half month high against a weaker dollar on Monday, in tandem with gains in riskier currencies as buoyant equities lifted investors' appetite for taking on risk.
The pound also rose to a near four-week high against the euro and to a one-month high against a basket of currencies.
Focus on Monday will centre on the release of the UK July purchasing managers' index on manufacturing activity at 0828 GMT, which is forecast at a robust 57.0, though this would mark a fall from 57.5 in June. ECONGB
Sterling has been lifted by recent buoyant UK data, including stronger than expected second quarter economic growth, though there are some concerns this trend may not be sustainable given the government's plans for harsh austerity measures.
"Sterling does seem to have got a lift from the general improvement in risk appetite, with the focus on banks reporting earnings," said Adam Cole, currency strategist at RBC.
"If UK banks' earnings are strong that could be sterling-positive."
UK equities .FTSE rose 1.4 percent in early trade.
At 0741 GMT, sterling was up 0.6 percent against the dollar GBP=D4 at $1.5772, having hit a 5-1/2 month high of $1.5783.
"The pound continues to make new highs as it looks to push towards $1.5870, the 61.8 percent retracement level of the down move from $1.6880 to the May lows at $1.4230," Michael Hewson, analyst at CMC Markets said in a note to clients.
The dollar came under pressure on concerns the U.S. economy is losing steam after below-forecast growth data last week.
The latest data from the Commodity Futures Trading Commission showed speculators increased net short dollar positions and reduced bets against sterling in the latest week. [IMM/FX] ^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^
For an overview of CFTC FX positioning data, click on
The euro EURGBP=D4 fell 0.4 percent to hit a near four-week low of 82.81 pence, helping to lift sterling's trade-weighted index =GBP to a one-month high of 82.2.
Analysts and traders said upbeat comments in the UK weekend press were also helping sterling, including a Sunday Times report citing Goldman Sachs predicting the UK will grow faster than the U.S. and the euro zone next year. [ID:nLDE670007]
Later in the week, focus will switch to the Bank of England's policy decision on Thursday. [BOE/INT]
Rates are fully expected to be left on hold at 0.5 percent and market players will be watching to see whether any other policymakers are leaning towards Andrew Sentance's view that UK interest rates need to rise.
(Reporting by Jessica Mortimer; Editing by John Stonestreet)
