RTRS:Sterling hits 2-week high versus dollar, outlook brightening
* Stop loss buy orders triggered as sterling rises
* Nationwide house price data beats forecasts
* UK manufacturing PMI data due 0928 GMT
By Nia Williams
LONDON, Nov 1 (Reuters) - Sterling hit a two-week high against the dollar on Thursday, helped by stronger-than-expected UK house price data that reinforced cautious optimism on economic growth picking up.
Data from mortgage lender Nationwide showed house prices rose faster than forecast in October. The figures came after last week's third-quarter GDP data showed the UK had emerged from recession.
Manufacturing PMI data for October, due at 0928 GMT, is forecast to be slightly weaker than the previous month at 48.0, although strategists said a poor reading was already priced into sterling and unlikely to knock the pound much lower.
Sterling rose 0.3 percent to $1.6168, its highest level since Oct. 18. Traders said stop loss buy orders were triggered around last week's high of $1.6145.
"The (PMI) data would have to be significantly worse than expected to have an impact on sterling. There's been some improvement in underlying sentiment," said Raghav Subbarao, FX strategist at Barclays.
Subbarao said better sentiment towards the UK had prompted many market players to trim bets on more quantitative easing from the Bank of England in November. QE tends to weigh on a currency as it increases its supply.
"Most people were looking for further QE in November but based on data and comments from the various MPC (Monetary Policy Committee) members that seems less likely now, and all that has supported sterling," he said.
The euro fell 0.3 percent against the pound to 80.06 pence, nearing a last week's low at 80.02 pence. A break below that level would take the euro to its weakest level in a month, with support expected around the 100-day moving average at 79.67 pence.
Some strategists said the euro looked vulnerable against the pound given concerns about whether Greece will secure more aid from its international lenders, and uncertainty about when Spain may ask for a bailout.
"We expect a fall the October manufacturing PMI, but not enough to alter our view that euro/sterling has resumed its long-term downtrend," Societe Generale currency strategist Kit Juckes said in a note.
