Sterling rises as data shows UK starting 2015 on strong footing

By Jemima Kelly

LONDON, Feb 4 (Reuters) - Sterling posted a second day of gains against the dollar on Wednesday, helped by a better-than-expected survey of Britain's dominant services sector that pointed to robust economic growth for 2015.

The UK Services Purchasing Managers' Index (PMI) reading of 57.2 topped all forecasts in a Reuters poll and suggested the economy was growing at a rate slightly above the 0.5 percent it managed in the final three months of 2014.

Earlier in the week, PMI surveys from the manufacturing and construction sectors also showed better-than-expected growth.

After posting its biggest one-day rise in nine months on Tuesday, gaining 0.9 percent as the dollar fell broadly, sterling rose another 0.4 percent against the greenback to trade at $1.5226.

Against the euro, the pound strengthened to as much as 74.865 pence, close to a seven-year high of 74.06 pence hit in January and up around 1 percent on the day.

"The PMIs were consistent with still solid growth for the UK and that's reinforcing the case for a stronger pound relative to the euro," said Lee Hardman, a currency economist at Bank of Tokyo-Mitsubishi UFJ.

But Hardman said investors were likely to be cautious on the pound ahead of a parliamentary election in May that could open the door to a referendum on Britain leaving the European Union, as well as another vote on Scotland breaking off from the rest of the UK.

Sterling has fallen around 11 percent against the dollar in the past six months as investors have pushed back expectations of when the Bank of England will start raising interest rates. Many banks expect sterling to fall further against a dollar propped up by the expectation that the U.S. Federal Reserve will start raising interest rates some time this year.

"We still think sterling is punching below its weight as the UK should remain a positive growth story this year, and the BoE (Shenzhen: 200725.SZ - news) is likely to be second only to the Fed (U.S. Federal Reserve) in eventually tightening its policy stance," wrote analysts from BNP Paribas (Xetra: 887771 - news) in a research note. (Editing by Kevin Liffey)