* Euro up after Draghi reported saying QE a long way off
* Sterling dips after slight disappointment on GDP
* Asian session subdued with Japan shut for holiday
(Adds more comment, reaction to UK data)
By Patrick Graham
LONDON, April 29 The euro inched up against the
dollar on Tuesday, helped by comments from European Central Bank
policymakers cooling any expectations that the bank will respond
to low inflation by easing monetary conditions further.
Sterling pulled back from a four and a half year high
against the dollar after the first estimate of gross domestic
product showed growth improving slightly but less than most
economists had expected.
The euro has struggled to push past a series of technical
barriers since a first approach last month to the big
psychological figure of $1.40 prompted warnings from the ECB
about the currency's strength.
But short-term euro zone interest rates continue to
push higher, boosting returns on the currency, and a source on
Monday said ECB President Mario Draghi had told German lawmakers
outright money-printing by the bank was still a long way off.
Preliminary German numbers later on Tuesday are
also expected to show inflation inching back up, easing pressure
on the bank to take action to fend off the risk of a cycle of
falling prices and demand.
"Draghi's comments are one of the reasons the euro is
holding strong this morning," said Stephen Gallo, a strategist
with Canadian bank BMO in London.
"I think the market is coming to the realisation that they
are quite relaxed about the threat of disinflation. There are a
lot of temporary factors behind the fall in inflation."
Like many dealers and analysts, however, he underlined the
lack of appetite to test the ECB's resolve to take action
against a stronger euro and any resulting drop.
The common currency rose around 0.1 percent to $1.3860
. It also rose 0.3 percent to 142.37 yen, well
above a one-week low of 140.99 yen seen on Monday.
Moves among major currencies were muted in Asia, as a public
holiday in Japan dampened trading activity.
"The euro seems to have gained a foothold around $1.3860,
but I'm not sure there is the appetite in the market to take it
higher," said a dealer with one U.S.-based bank in London.
The day's first big data release showed Britain's economy,
one of the brightest in the developed world, improved further in
the first quarter, but there was widespread disappointment in a
market that had been counting on a stronger figure.
"The GDP figures have taken the wind out of sterling. It was
less so against the euro but there were quite a few people
hoping for another spurt higher against the dollar," said
another London-based dealer.
Having gained early on, the data turned sterling back
broadly flat against the dollar at $1.6802.
Bank of England chief Mark Carney sounded constructive on
the economy in an interview with a regional newspaper published
on Tuesday, though he said there remained a lot of slack in the
labour market - reflecting a concern over the sources of growth
that may yet keep interest rates low well into next year.
While sterling remains buoyant on the back of expectations
that the bank will raise official returns on the pound in 2015,
views on its ability to add much to a 10 percent rise over the
past 12 months are divided.
(Editing by Gareth Jones)