* Trade-weighted sterling rises to 2-month high -BoE data * Cable's rally this week takes a breather * Option barriers at $1.60 unlikely to tested By Anirban Nag LONDON, March 2 (Reuters) - Sterling rose to a two-week high against the euro on Friday as investors trimmed bets on further quantitative easing in the UK, although it ran into some profit-taking against the U.S. dollar, which will keep it from testing recent peaks. The euro drifted lower, retreating from a three-month high against the dollar, after the European Central Bank pumped more cash into the banking system and as concerns regarding Greek austerity and restructuring programme remain. And while these worries have led to the underperformance of the euro, slightly better UK data in recent weeks has supported the pound. On Friday, construction sector PMI survey handily beat expectations, lending support to the pound. The improvement in data has led investors to pare back expectations that the Bank of England will pump more money into the economy to stimulate growth. Earlier this week, BoE governor Mervyn King was seen to have nudged the bar for more QE higher when he told lawmakers the bank will be guided by upcoming data when deciding whether to print more money. The euro was down 0.35 percent at 83.155 pence, its lowest in two weeks. It looked set for more losses after it fell below support around 83.30 pence which is the 61.8 percent retracement of the euro's rise from its January low of 82.22 pence to its recent two-month high of 85.06 pence. Against the dollar, sterling was down 0.2 percent at $1.5920 , with option barriers at $1.60 still safe and stops cited just below its 200-day moving average of $1.5896. More stops are said to layered at $1.5875/80. "The dollar has been a standout performer today, and while the PMI reading stemmed sterling's fall, flows are light and it does not look that $1.60 will be tested today," said a London-based spot trader. Cable hit a three-and-a-half month high of $1.5993 earlier this week and has risen for three straight sessions until Friday, leaving it ripe for a correction. "The euro is softer and that is pulling cable lower, leaving it vulnerable towards the downside," said Adrian Schmidt, forex strategist at Lloyds TSB. "But against the softer euro, sterling has been resilient and that should hold." UK DATA Sterling's resilience has driven it to a two-month high on a trade-weighted basis, BOE data showed. Trade weighted sterling rose to 0.25 percent to 81.6 its highest level since early January. The rise came as the UK construction sector PMI survey somewhat cushioned the weaker than expected reading of the manufacturing PMI survey on Thursday which came in below forecasts but held above the 50 level that divides expansion from contraction. Analysts, however, are cautious about forthcoming UK data. They said if the more important PMI survey for the dominant services sector due on Monday mirrored the manufacturing sector activity, sterling could come under pressure. "UK manufacturing PMI disappointed and if this is replicated by the more important PMI services indicator, we would expect sterling/dollar to come back under pressure," Morgan Stanley strategists said in a note. "Sterling is also expected to feel the effects of a broader scaling back of global investor optimism. Hence, we maintain our sterling/dollar bearish strategy." (reporting by Anirban Nag; editing by Hugh Lawson)

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