* Sterling outperforms, other pairs stick to ranges
* Carney tells Sunday Times UK rates may rise before pay recovers
* Dollar steady after first weekly loss since early July
* Eyes on Jackson Hole meeting later in week
By Patrick Graham
LONDON, Aug 18 (Reuters) - Sterling was the main mover on major currency markets on Monday, recovering from last week’s multi-month lows after the Bank of England said interest rates might have to rise before wage inflation picks up.
The dollar, knocked back last week after a strong run since early July, was roughly steady against the yen and euro and a basket of currencies used to measure its broader strength, hampered by U.S. Treasury yields that were close to 16-month lows.
Sterling rose after BoE Governor Mark Carney said in a newspaper interview that UK rates may have to increase even before the growth of real wages recovers, backtracking from comments last week that suggested the opposite and prompted markets to push back bets on a first hike.
“The comments in the (Sunday) Times were definitely a surprise to markets and that’s what is behind this move this morning,” said Adam Myers, head of European FX strategy with Credit Agricole in London.
The pound has taken a hammering over the past month, hurt by the suspicion that all of the best news on the UK economy has been priced in and that the bank might not be quite as quick as some had expected to raise rates.
After a sixth straight weekly loss against the dollar, it gained around a third of a percent against the euro and the dollar in early European deals, trading at 79.97 pence per euro and $1.6733.
Myers said the week might prove rocky for the dollar after an uncertain performance so far in August that has seen it fail to build on improvement which prompted many analysts to predict the greenback was finally on for a longer run higher.
The wait for the annual U.S. meeting of central bankers in Jackson Hole might help hold off bigger moves this week, he said, but there were risks to the dollar particularly against the euro.
“After what was a very exciting July, the market has tried both ways over the past couple of weeks,” Myers said.
“The euro tried several times to break out higher last week and was stopped each time around $1.34. I think the danger is we may see that (barrier) broken this week.”
Dollar, euro and yen rates were little changed from their levels late in New York on Friday, when heightened tensions in Ukraine drove global bond yields to fresh lows.
The euro last traded at $1.3387, flat on the day and well within the slim $1.3333-$1.3445 range seen so far this month. The dollar bought 102.45 yen, a touch more than Friday, while against a basket of currencies it edged down to 81.414.
“Just looking at the dollar index, we dipped down below what I see as a key level of 81 and a half, and we’re starting off the week below there,” said Bart Wakabayashi, head of currencies at State Street in Tokyo.
“It’s very hard to judge, with thin summer markets, but it should be a bearish sign for more dollar retracement.”
Data on Friday showed that speculators reduced bullish bets on the dollar in the week ended Aug. 12, net longs declining for the first time in four weeks.
U.S. Treasury yields remained close to recent lows, with the yield on the benchmark 10-year U.S. Treasury note at 2.357 percent in Asia.
The Jackson Hole symposium starts on Thursday, with Federal Reserve chief Janet Yellen due to speak on Friday. (Additional reporting by Lisa Twaronite in Tokyo and Ian Chua in Sydney, editing by John Stonestreet)