Pound hits four-month high on upbeat British GDP, hawkish chief economist
Updates at 0700 GMT, adds analyst comment, chief economist context
LONDON, July 11 (Reuters) -Sterling GBP=D3 rose to its highest in four months on Thursday, after data showed the UK economy grew more quickly than expected in May, potentially lowering the chances of an August rate cut.
Britain's economic output rose by 0.4% in May, data from the Office for National Statistics showed, beating the 0.2% increase forecast by a Reuters poll of economists.
The pound rose by as much as 0.12% to $1.2865, its highest since March 8 GBP=D3, building on a 0.48% increase in theprevious day.
Sterling also strengthened againstthe euro EURGBP=D3, with the common currency down around 0.1% to itsweakest in nearly a month at 84.21 pence.
"This snapshot of an economy growing a bit faster than forecast, could make Bank of England policymakers that bit more reticent about voting for an interest rate cut on 1 August," said Susannah Streeter, head of money and markets, Hargreaves Lansdown.
Futures markets show traders attach a roughly 50/50 chance of the Bank of England cutting rates at its Aug. 1 meeting. 0#BOEWATCH
The stronger-than-expectedGDP reinforced a Wednesday speech by BoE chief economist Huw Pill, which also caused markets to push back bets on policy easing.
Pill said services inflation and wage growth showed "uncomfortable strength" despite headline inflation falling to the BoE's 2% target in May, and it was unlikely that June inflation figures due next week would change the big picture.
Pill is seen as a centrist on the Monetary Policy Committee, and the comments were his first in more than six weeks as the BoE went into a quiet period in May in the run-up to last week's parliamentary elections.
"Although he (Pill) stressed it was a question of when, not if, interest rate cuts will come, the possibility of a summer rate cut is fading," said Streeter.
The big picture for global currencies will be shaped by U.S. inflation data due at 1230 GMT, whichwill reinforce or challenge current market expectations that the Federal Reserve is more likely than not to cut rates in September.
Reporting by Amanda Cooper and Alun John; Editing by Arun Koyyur
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