Sterling gets some respite vs dollar as UK trade deficit narrows

LONDON, March 12 (Reuters) - Sterling got some respite from recent heavy losses against the dollar on Thursday, rising against the greenback after data showed the UK's trade deficit narrowed to its smallest since mid-2013 in January.

The Office for National Statistics said the total deficit shrank to 616 million pounds from 2.14 billion pounds in December, helped by a surge in exports of services and the plunge in oil prices.

Earlier on Thursday, a survey showed British house prices rose more than expected in February, suggesting a growing shortage of properties might herald the end of a slowdown in the market.

Sterling rose to $1.4992 after the data from around $1.4965 before its release, leaving the pound up 0.4 percent on the day but still close to a 20-month low of $1.4912 hit overnight as the dollar rallied across the board.

"(The trade data) is another positive in the UK outperformance story," said Stephen Saywell, global head of FX strategy at BNP Paribas (Xetra: 887771 - news) in London.

"Like the U.S., the UK is likely to hike (interest rates) sooner rather than later, but there's still a lot of uncertainty about the timing," BNP Paribas's Saywell added. "If the market brings forward that timing, sterling continues to look pretty positive."

On Wednesday, Bank of England policymaker Martin Weale, who last year was one of two BoE rate-setters to vote for a rise in interest rates, had said the fall in oil prices had given the Bank no more than breathing space to keep rates on hold.

Against the euro, the pound was flat at 70.70 pence, close to a seven-year high of 70.145 pence hit on Wednesday . The euro has been hit broadly since the European Central Bank kicked off its 1.1 trillion euro asset-buying programme at the start of the week.

"Euro/sterling might in fact be due for some consolidation having failed to break the 70 pence barrier yesterday and of course, we cannot fully discount the possibility of the UK general election finally starting to weigh upon the market's conscience," wrote BNY Mellon strategists in a research note.

"But we suspect that we would only be talking about temporary respite in view of the forces waged against the euro." (Reporting by Jemima Kelly; Editing by Tom Heneghan)