(Reuters) - Sterling rose to a one-month high against the dollar on Monday, gaining in tandem with the euro after Cyprus clinched a last-minute deal with international investors to secure a 10 billion euro bailout. But analysts said gains may be limited due to concerns about the potential precedents set by the bailout deal, which will inflict heavy losses on uninsured depositors. Sterling, which tends to do well against the safe-haven dollar when investors feel confident, rose to around $1.5259, its strongest since February 22, before paring gains to last trade steady at $1.5226. Traders said a reported options expiry at $1.5200 could push it towards that level. Longer-term UK fiscal and economic problems were seen weighing on the pound. Ratings firm Fitch warned on Friday it may follow Moody's and cut the UK's triple-A sovereign credit rating. The euro was steady at 85.32 pence, off a six-week low of 84.84 pence reached on Friday when it looked at risk of dropping towards the February 11 low of 84.42 pence. Cyprus agreed with the European Union, the European Central Bank and the International Monetary Fund on a plan that will shut down its second-largest bank, while a potentially large levy will be imposed on deposits above 100,000 euros. "There is a degree of uncertainty about the Cyprus deal and there has to be concern about the possibility of flight out of peripheral euro zone assets," said Jeremy Stretch, head of currency strategy at CIBC. Traders might use any rise in the euro against the pound as an opportunity to sell, he said, adding, "It could test below the lows seen last week and even back towards the mid-February low." Stretch said a lot of bad news on the UK economy was already priced into the pound, which had the potential to rebound towards $1.5450 against the dollar, although investors may at that point opt to sell the UK currency. Other analysts saw little scope for a rebound in the pound given the UK's economic problems. "There remains little reason to be optimistic on sterling with the UK economy likely to remain subdued and there is little on the UK calendar this week that could prompt a move higher," Lloyds analysts said in a note to clients. They added that a move beyond the $1.53 level "looks difficult". Final gross domestic product data on Wednesday is expected to confirm that the UK economy shrank by 0.3 percent during the fourth quarter of 2012. Positioning data last week showed a sharp increase in speculators betting on falls in sterling, allowing the potential for a short-covering rally in the pound as investors take profit on those bets. Some traders also pointed to speculation that British telecoms firm Vodafone may be looking to sell its stake in Verizon Wireless in the United States. Such a deal could boost the pound against the dollar.

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