Sterling edges up despite cooling UK economic data

LONDON (Reuters) - Sterling was on track on Friday for weekly gains against the dollar and euro to start 2022, despite a mixed picture emerging for Britain's economy.

The currency has strengthened since mid-December in part due to the Omicron variant of COVID-19 proving less disruptive to the economy than originally feared, analysts have said, with the government only lightly tightening restrictions so far.

Sterling was heading for a 0.4% gain versus the dollar for the week and 0.6% up against the euro.

On the day, the pound was up 0.3% versus the dollar at $1.35720.

Sterling's gains partly reflected a weaker dollar across the board, after a December U.S. jobs report missed expectations.

Against the euro, the pound fell 0.2% to 83.585 pence per euro.

Economic survey data this week showed Omicron has had an impact. Survey data for Britain's construction sector on Friday showed growth cooled in December, falling to a three-month low.

A similar Purchasing Managers' Index (PMI) survey for the services sector on Thursday showed the biggest loss of momentum since the country was last in lockdown, falling to a 10-month low in December.

The pound has nonetheless broadly maintained momentum versus the dollar, rising from a one-year low of $1.31615 hit in December.

Investors will closely watch to see if the Bank of England will further tighten policy, with a further interest rate rise expected as early as next month after a surprise hike in December.

(Reporting by Iain Withers; Editing by Andrew Cawthorne and David Evans)