Sterling slides amid better but backward-looking GDP data

(Updates after GDP data, adds new quote)

By Jemima Kelly

LONDON, July 27 (Reuters) - Sterling slipped against the dollar and euro on Wednesday despite second-quarter UK growth data that was stronger but too backward-looking to have much impact on the currency.

Helped by the biggest upturn in industrial output since 1999, Britain's economy grew by 0.6 percent, up from 0.4 percent in the first three months of 2016, during a second quarter that ended with a vote to leave the European Union.

Sterling was trading at around $1.31 at 0900 GMT, half an hour after the numbers were published, leaving it down 0.2 percent on the day but more than 3 cents above a 31-year low hit earlier in the month, before it was clear who Britain's next prime minister would be in the wake of the Brexit referendum.

"It's always difficult to tell where you're going by looking in the rear-view mirror, and as such today's GDP figures can't be taken as evidence of the current climate," said Hargreaves Lansdown economist Ben Brettell.

"However, what they do show is an absence of pre-Brexit concerns, meaning that if the forecast downturn does materialise, at least we start from a position of relative strength."

The pound has tumbled almost 12 percent against the dollar since the June 23 referendum. Investors are worried that Brexit will have negative consequences for the economy and in particular an already huge current account deficit, which will widen further if investment flows dry up.

Against the euro, sterling slipped 0.3 percent on the day to trade at 83.89 pence.

"They (the numbers) do give us an idea of how the economy was set up going into the referendum so they're not completely insignificant," RBC Capital Markets currency strategist Adam Cole said. "But they really are in the shadow of the monthly numbers, which help us build up a picture of what the economy looks like post-referendum."

British finance minister Philip Hammond reiterated on Wednesday that he and the BoE (Shenzhen: 200725.SZ - news) would take whatever action was needed to bolster the economy as it entered "a period of adjustment" after the Brexit vote.

Sterling hit a two-week low on Tuesday after Bank of England policymaker Martin Weale said a recent batch of weak UK data would be "very material" for the bank's next policy meeting. He had said last week that more evidence of economic weakness was needed before he would back an interest rate cut.

The BoE surprised markets in July by not cutting the benchmark borrowing cost from its record low of 0.5 percent. But minutes of the decision showed most policymakers expected to support an unspecified package of measures to boost the economy at the Bank's meeting next week.

A Reuters poll published on Tuesday found that while economists almost unanimously expect the BoE to cut rates next week, a slim majority reckon it will hold off on restarting its asset purchase programme for now. (Editing by Mark Heinrich)