* Euro sold off at upticks, outlook still poor
* Dollar looks to industrial output data
* UK GDP data cold comfort for sterling
(Updates prices, details)
By Anirban Nag
LONDON, Aug 15 The euro was on track for a
second week of losses against the dollar on Friday, and hovered
near five-month lows against the Swiss franc, on concerns about
the euro zone's economic prospects and expectations for more
In Britain, a second reading of gross domestic product (GDP)
highlighted the divergence between the British and euro zone
The data confirmed that the UK economy grew at its fastest
annual pace in over six years. However, it failed to inspire the
pound as investors are still winding back bullish bets on the
currency after pushing back expectations for a rate hike to the
first quarter of next year.
Both sterling and the euro have failed to build on knocks
taken by the dollar since the release of lacklustre weekly
jobless claims on Thursday and weak retail sales data earlier
this week. The spotlight on Friday will be on U.S. industrial
output data for July and consumer confidence for August.
Before the U.S. data, investors trimmed short euro bets,
helping it to climb to $1.3380, although many were still
selling the currency at higher levels. The persistent selling
left the euro on course for a second straight week of losses,
according to Reuters charts.
It was steady against the Swiss franc at 1.2115 francs,
having fallen to a five-month low of 1.2110 francs
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 rose 0.15 percent against the yen to 102.58 yen
. The greenback stood to gain 0.5 percent against the yen
this week although Treasury yields remained at low levels, with
investors noting the emergence of bearish factors for the yen.
"We note that Japanese policy officials are becoming more
cautious with regard to their assessment of the economy,
suggesting that it is too early to say if Japan is out of
deflation," Morgan Stanley said in a note.
"This appears to be a change of tone from the earlier more
optimistic views being expressed. Hence, we believe that there
is an increased possibility that the BoJ takes further action,
putting the yen under pressure."
Sterling remained close to four-month lows of $1.6657
hit on Thursday after the Bank of England indicated on
Wednesday that it is in no hurry to raise interest rates.
It was last trading at $1.6890, flat on the day and 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 in 2014.
The Canadian dollar rose to trade at C$1.0888, and
could add to those gains if an unprecedented revision to July
employment data shows more jobs were created than first thought,
The July version of Canada's market-moving jobs report
contained an error and must be restated, the country's main
statistics agency said on Tuesday.
(Editing by Louise Ireland and Susan Fenton)