(Reuters) - Sterling hit a 2-1/2 year high against the dollar on Thursday, boosted by growing expectations that robust economic data will lead the Bank of England to raise interest rates sooner than previously flagged. The pound rose to $1.6615, triggering stop-loss buy orders above $1.6605 - the peak it hit in early January this year - to touch its highest level since mid-August 2011. It marked the fifth straight day of gains for the pound against the dollar. Those gains came as investors brought forward expectations of a rate hike by the Bank of England to as early as late 2014 or early 2015. A sharp drop in the British jobless rate to 7.1 percent on Wednesday along with recent data that has shown a sustained pick-up in consumer demand has led investors to believe the BoE could be the first major central bank to raise rates. UK money markets, as highlighted by the sterling overnight interbank average, are edging towards pricing in the chance of an interest rate rise in 11 months' time. Earlier this week the first chance of a hike was envisaged in a year. Markets see a 60 percent chance of a rate hike in 18 months' time. "Given the most recent development it appears that the market is pricing in a rising probability of the BoE considering higher rates by the end of this year," said Manuel Oliveri, currency strategist at Credit Agricole. But he advised caution about buying the pound against the dollar as the BoE has indicated it is in no hurry to raise rates, even if the jobless rate drops below the 7 percent threshold it set in its forward guidance last August. "We advise against buying sterling/dollar as elevated short positioning and the risk of the BoE considering stronger forward guidance may ultimately trigger another correction lower," Oliveri added. In August, the BoE said it would not raise interest rates until unemployment fell to 7 percent, something it forecast would take at least three years. Sterling has been the surprise performer over the past six months as an economic recovery has taken hold, raising the prospect of interest rate hikes, although pressure to lift has eased after CPI inflation fell back to target in December. Sterling slipped against the euro, which was in turn helped by surveys of French and German business activity that came in above expectations. The euro was up 0.5 percent at 82.125 pence, off a one-year low of 81.68 pence struck on Wednesday when yield differentials between British and euro zone bonds widened to their highest in eight years.

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