* Euro sold off at upticks, outlook still poor
* Dollar looks to industrial output data
* UK GDP data in focus in European session
(Adds details, quotes)
By Anirban Nag
LONDON, Aug 15 The euro was on track for its
fifth week of losses against the dollar on Friday, and hovered
near five-month lows against the Swiss franc on growing worries
about the euro zone's gloomy economic prospects and more
In Britain, a second reading of gross domestic product (GDP)
could highlight the divergence between the British and euro zone
economies. But traders said, the data is unlikely to provide
much support to the pound given investors are still winding back
bullish bets on the currency and pushing back expectations of a
rate hike to the first quarter of next year.
Both the pound and the euro failed to build on knocks taken
by the U.S. dollar following the release of lacklustre weekly
jobless claims on Thursday and weak retail sales data earlier
this week. Spotlight on Friday will be on U.S. industrial output
data for July and consumer confidence for August.
The euro was little changed at $1.3370, having
recovered from a brief dip to $1.3348 on Thursday and well below
highs of $1.34 struck after the soft U.S. data was released.
Most investors were selling into a bounce, keeping it close to a
nine-month trough of $1.3333 and on track to end lower for the
fifth straight week, according to Reuters charts.
It was steady against the Swiss franc at 1.2116 francs,
having fallen to a five-month low against the Swiss franc of
1.2110 late on Thursday.
Data on Thursday showed growth in the euro zone stalled in
the second quarter, with Germany suffering a surprise
contraction. At the same time, inflation in the region was
confirmed to have slowed to levels not seen since the height of
the financial crisis nearly five years ago, leaving deflation a
very real threat.
"With plenty of bad news from the euro zone behind us and
investors adjusting their expectations lower, it may be more
difficult for euro/dollar to fall from here, based on bad news
from the euro zone only," ING analyst Petr Krpata said.
"For a more sustained depreciation, we need to see a shift
in the Fed's policy stance - we look towards Jackson Hole later
next week and/or the Fed meeting in September as the next
opportunities for the Fed to unfold this monetary divergence."
The dollar inched up against the yen to 102.52 yen.
The greenback stood to gain about 0.4 percent against the yen
this week although Treasury yields remained at low levels, with
investors noting the emergence of bearish factors for the yen.
"Recent indicators out of Japan have been weak, like the
unimpressive GDP, highlighting economic weakness in the second
quarter. Until now further Bank of Japan easing was not
considered a possibility but such views are starting to be
challenged," Barclays Bank chief Japan FX strategist in Tokyo,
Shinichiro Kadota, said.
Sterling remained close to four-month lows of $1.6657
it hit on Thursday after the Bank of England indicated
that it is in no hurry to raise interest rates. It was last
trading at $1.6885, steady on the day.
The pound has shed almost 3 percent since hitting a six-year
high of $1.7192 in mid-July when hopes were high for the BOE to
hike rates later this year.
Britain will publish the second read on second-quarter gross
domestic product at 0830 GMT. Economists polled by Reuters
expected no revision from the 0.8 percent quarter-on-quarter
expansion announced previously.
(Additional reporting by Shinichi Saoshiro; Editing by Louise