* Pound rises to $1.6037, highest since mid-November * Trade-weighted sterling index rises to 13-month high * Month-end, quarter-end flows weigh on dollar FREE GUIDES AND REPORTS FROM DIANOMIADVERTISEMENT ISA Brochures Get free ISA brochures and guides from the top providers Get Free Brochures LONDON, March 30 (Reuters) - Sterling rose to its highest in more than four months against a weak dollar on Friday, with the U.S. currency under pressure on month and quarter-end rebalancing flows combined with expectations U.S. monetary policy will stay ultra-loose. Gains against the greenback lifted sterling to a 13-month high against a trade-weighted basket of currencies, data from the Bank of England showed. Trade-weighted sterling rose to 81.90. Technical analysts said sterling's break above its 200-week moving average against the dollar for the first time since August 2008 could be a bullish signal, though a weekly close above that level at $1.6014 would be needed for confirmation. "Is the pound about to embark on life above 1.60? We shall have to see," said Kathleen Brooks, research director at Forex.com. "The expectation from the OECD that the UK is about to fall into another recession makes quantitative easing more likely in May in our view. Thus, the move higher in sterling could be a bit premature." Sterling rose to $1.6037, its strongest since November 14, and was last trading at $1.6000, up 0.3 percent for the day. Traders reported a large option barrier at $1.6050 and stops above that level. For the quarter the UK currency in on track for its best performance since end-2010. Further support came from expectations that Gaz de France's bid to buy the remainder of the UK's International Power for 6 billion pounds could lead to the French firm needing to buy large quantities of sterling. Sterling was also helped by month-end flows, which analysts said were expected to be broadly negative for the dollar. The dollar also ceded ground after Chicago PMI data printed below expectations. "The outperformance in U.S. equities of late means portfolio rebalancing at month and quarter-end points to a weaker dollar. Everyone is looking for a softer dollar today and that's helped sterling get back above $1.60," said Ankita Dudani, currency strategist at RBS. EURO CLIMBS But sterling's gains lagged the euro, which was slightly higher 83.47 pence, right in the middle of this month's 82.83/84.24 range. The common currency held its ground after euro zone finance ministers agreed on Friday on a temporary increase in the capacity of their bailout funds to prevent a new flare-up of Europe's sovereign debt crisis, although analysts said markets may judge it too small to be convincing. Analysts expected problems in euro zone debt markets to return soon with deep spending cuts due to austerity measures likely to hurt the economy and weigh on the common currency. Standard Chartered Bank in a note recommended investors to buy euro/sterling 'put' spreads as the euro looked set to weaken further. So far the pound has been able to shrug off concerns over the health of the British economy, expected to remain weak through 2012 and beyond - something that could force the Bank of England to increase its asset purchase programme. Data released overnight showed British consumer confidence unexpectedly fell to a three-month low in March as Britons grew increasingly worried about the outlook for their finances and for the economy as a whole, denting hopes of a consumer spending-fuelled recovery.

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