LONDON (Reuters) - Sterling was a touch firmer on Wednesday, holding its ground against other major currencies in the absence of any major economic data or news related to trade talks with the European Union.
The pound has inched away from 2-1/2-month lows hit against the dollar at the start of the week, winning some respite on Tuesday thanks to economic growth data.
Preliminary data for fourth-quarter gross domestic product showed the economy grew 1.1% year-on-year, the same as in the previous quarter, and more strongly than economists had forecast.
Sterling rose to as high as $1.2991 on Wednesday and was last up 0.1% at $1.2973. It has gained roughly 0.8% from Monday's 2-1/2-month low hit amid uncertainty over Britain's future trade relationship with the European Union.
Against a broadly weaker euro, the pound touched its highest level of February at 83.91 pence, up 0.4% on the day. .
Adam Cole, chief currency strategist at RBC Capital Markets, said the outlook for the British currency remained bearish given the trade talks with the EU.
Investors are nervous that British Prime Minister Boris Johnson is taking a hard line in the talks, which need to be concluded before the end of the year to avoid a potentially disruptive break in trading relations.
"The risks for sterling are on the downside at this early stage of trade negotiations and the talks are likely to show that the UK and EU are miles apart," said Cole.
Signs of strain between Britain and the European Union emerged on Tuesday.
British finance minister Sajid Javid said Britain wanted a stable relationship with the European Union for "decades to come" in financial services, only to receive an instant rebuttal from Brussels.
(Reporting by Dhara Ranasinghe; Editing by Kevin Liffey and Nick Macfie)