LONDON: Sterling touched a seven-week peak against the dollar and inched higher against the euro on Thursday, after better-than-expected data earlier this week increased bets the British economy would avoid slipping into recession. Solid industrial output data on Tuesday and the Bank of Japan's massive stimulus steps last week, which has driven the yen lower and is boosting demand for alternative currencies, helped support sterling against the dollar. Analysts said the British currency was unlikely to see any significant gains until Bank of England (BoE) minutes next week, and first quarter growth figures later in the month, and was still susceptible to losses given the economy's bleak outlook. The pound was up 0.2 percent on the day at $1.5370, its highest level since Feb. 20. A British clearer was reported as the main buyer of the currency. Support lay at its 55-day moving average of $1.5314. Traders also said buyers could emerge at $1.5280 while levels closer to $1.54 would be seen as an opportunity to take profit. Sterling hit a fresh 3-1/2 year high versus the yen at 153.13 yen. The euro was down 0.1 percent at 85.13 pence, inching away from a two-week peak of 85.60 pence reached on Tuesday. Resistance was cited at the 55-day moving average around 85.84 pence. "For sterling, the BoE minutes are going to be important to see how close another round of quantitative easing is going to be and then the first quarter GDP ... it seems likely we have avoided a triple-dip recession," said Kathleen Brooks, research director at FOREX.com. Brooks said that if growth figures show Britain had managed to escape recession sterling could cross the $1.54 level and target $1.5659, the 100-day moving average. If, however, the BoE decided to restart its asset purchase programme, sterling could come back under pressure. Three Monetary Policy Committee members including Governor Mervyn King have voted in favour of more easing and next week's BoE minutes would be crucial to see if any other member had shifted camp. In contrast, the U.S. Federal Reserve's latest minutes showed a few policymakers expected to taper the pace of asset purchases by midyear and end them later this year, while several others expected to slow the pace a bit later and halt the quantitative easing programme by year-end. Asset purchases, or quantitative easing, usually weigh down on a currency as they increase its supply. Analysts said despite the pound's relative stability right now the market remains wary. "Sterling has remained under pressure on many of the crosses ... our analysis of flow data suggests that the UK has not been attracting overseas investor inflows in recent months, leaving sterling vulnerable," analysts at Morgan Stanley said in a note.

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