* Sterling steady against dollar, holds gains vs euro
* U.S. consumer spending rose for seventh straight month
* Pound on track to post gains against dollar in 2013
* BoE worried strong pound threatens recovery
By Shadi Bushra
LONDON, Dec 23 Sterling pared early gains
against the dollar in thin trade on Monday, as strong consumer
spending data from the United States helped the dollar recover.
The pound was steady against the dollar, trading at
$1.6344 - off a high for the day of $1.6373 - as some
speculators trimmed bullish bets on the pound before the year
Data released on Monday by the U.S. Commerce Department
showed the largest consumer spending increase in five months in
November. Consumer spending accounts for over two-thirds of U.S.
economic activity, and has risen for seven straight months.
The pound is on track to post gains against the dollar this
year, with gains picking up in the last six months as the UK
economy improved faster than many of its European peers.
Last week saw a string of positive economic indicators that
highlighted Britain's slowly strengthening recovery.
"That will have a small bearing, but I don't think there's
an ongoing move on the back of strong data from last week," said
Richard Wiltshire, chief FX broker at ETX Capital. "We saw the
moves and now most markets are quite happy within their ranges.
People are quite happy to coast to the year end."
Apart from thin trading conditions sidelining many,
investors are likely to be wary of the pound in the near term
after Bank of England (BoE) policymakers warned that a
substantial further appreciation of sterling would pose
"additional risks to the balance of demand growth and the
BoE policymakers could step up their rhetoric against future
potential sterling gains, analysts said. One way they could curb
gains is to reiterate their pledge to keep rates low for longer.
That is likely to put downward pressure on rising short-term
"We remain cautious on sterling/dollar as the BoE is
unlikely to start raising interest rates before the Fed," said
Mansoor Mohiuddin, head of FX strategy at UBS.
"Both central banks may only begin hiking in the second half
of 2015. But sterling should make renewed gains against the euro
towards 0.81 pence as the European Central Bank keeps its
explicit easing bias in 2014."
The euro was trading 0.1 percent higher on the day at 83.82
pence, not far from a two-week low of 83.335 struck