(Reuters) - Sterling rose to its highest in more than a week against the dollar on Wednesday after upbeat UK jobs data and Bank of England minutes threw doubt on the chances of more monetary easing next month. Sterling remained close to an earlier four-month low against a broadly firmer euro after Moody's affirmed Spain's rating, easing widespread fears of a downgrade to 'junk' status. Unexpectedly solid UK jobs numbers added to signs that the economy may have staged a reasonable recovery in the third quarter after three consecutive quarters of contraction. The first estimate of third quarter gross domestic product is due next week. The pound rose around 0.3 percent on the day to $1.6168, its highest since October 5, with more gains likely to see it target the peak on that day of $1.6218. "The unemployment data has definitely caught the market by surprise, and I don't think the market was expecting such a mixed set of minutes from the Bank of England," said Nawaz Ali, analyst at Western Union Business Solutions. "It's taken the pressure off sterling and put the focus back on next week's GDP data ... The question is can the UK economy carry on that momentum into Christmas?" BoE minutes showed policymakers were split on the need to buy more British government debt under their quantitative easing programme. Most economists had been expecting the central bank to opt for more QE next month. The euro remained higher on the day against the pound after the data and the minutes, trading up 0.1 percent at 81.11 pence, off an earlier high of 81.37 pence, its highest since mid-June. A firm break below its 200-day moving average around 81.12 pence could push the single currency lower, however. "We do see some upside potential for euro/sterling, but it is more of a euro story than sterling," said RBS currency strategist Melinda Burgess, adding the euro could rise to 82-83 pence. UK OUTLOOK Even if the unemployment figures have shown an improvement, the signs of recovery in the third quarter still remain relatively muted. Retail sales data on Thursday and public borrowing on Friday will give further clues as to the broader health of the economy. Analysts at BMO have a buy recommendation on the euro against the pound, targeting 82.22 pence, with a partial take-profit at 81.50 pence and a stop at 80.20 pence. In a note to clients they said the minutes and the data would give the pound "breathing space" but were not enough to justify abandoning "bullish euro/sterling positioning".

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