LONDON (Reuters) - The pound ticked a fraction higher against the dollar on Monday as traders stayed focused on key data due this week for hints on the Bank of England's future interest rate hike trajectory.
At 1100 GMT, sterling was up 0.07% against the dollar at $1.2706. The euro fell against the pound, dropping 0.05% to 86.17 pence.
Figures on Friday from the Office for National Statistics showed British economic output growing by 0.5% in June, above expectations of economists in a Reuters poll for 0.2% growth.
The stronger-than-expected showing raised expectations that the Bank of England will keep on raising interest rates.
Traders are now awaiting wage and employment data due at 0600 GMT on Tuesday for more direction on the central bank's next move.
"If the wages data still comes in strong then it will boost fears that the BoE is a bit further away from halting the tightening cycle. If the wages data is soft, then it is the reverse, of course," said Stuart Cole, chief macro economist at Equiti Capital.
The data will be followed on Wednesday by CPI figures, which will show whether UK inflation is slowing as expected by analysts.
According to Equiti's Cole, a large fall in the headline rate is expected but the key for the BoE is the core rate which is forecast to fall by only 0.1%.
"As per the wages figures, any strength in the core rate will raise expectations of a higher terminal rate leaving us facing again the same dilemma for sterling," said Cole.
The week will end with UK retail sales for July, with traders looking for signs of how well consumption is holding up.
Any suggestion that consumption is faltering will be a negative for sterling, said Cole.
On Aug. 3, the Bank of England (BoE) raised interest rates for the 14th time since late 2021 to try to calm inflation.
Traders are predicting around an 81% chance of a 25 basis point hike from the BoE at its next meeting on Sept. 21, and around a 20% chance of no change.