LONDON, Feb 24 Reuters The pound held steady on Friday, thanks to a modest lift from data that showed an improvement in UK consumer sentiment, but the currency was still headed for its first monthly drop since September.

British consumers have become more optimistic about their personal finances and the outlook for the economy, but their mood is a long way below where it was prior to the COVID19 pandemic, market research firm GfK said on Friday.

Sterling was last flat against the dollar at 1.20165. The pound has lost 2.4 in value so far in February, the first month it has fallen since September39;s near4 fall to a record low.

Against the euro , the pound was unchanged on the day at 88.17 pence per euro. Broadbased weakness in the yen sent the pound up by as much as 0.5 to 162.62 yen, with incoming Bank of Japan Governor Kazuo Ueda saying it was appropriate to keep ultraloose monetary policy.

A pickup in consumer sentiment does not always translate into a pickup in spending, as evidenced by a flat read of retail sales for February from the Confederation of British Industry on Thursday.

But energy prices are finally receding from last year39;s punishing highs, and the UK economy is not looking quite so bad as expected just a few short weeks ago, according to this week39;s Purchasing Management Index PMI surveys on business activity, which showed an unexpected bounce in early February.

Following on from Tuesday39;s strong PMI release, the UK outlook has received…