LONDON, June 1 Reuters The pound edged up on Thursday, taking advantage of a dip in the dollar after Federal Reserve officials indicated the central bank might skip a rate hike this month, while UK data painted a picture of an increasingly gloomy economy.

Data from the Bank of England BoE showed British lenders approved fewer mortgages in April than in March and the value of new loans also fell, highlighting the softness in the housing market.

A separate report earlier from mortgage lender Nationwide showed UK house prices fell by the most since 2009 in the 12 months to May, and the country39;s housing market faces further headwinds after a recent jump in borrowing costs.

Sterling was last up 0.2 against the dollar at 1.2467 and flat against the euro at 85.90 pence, close to its strongest in six months.

The pound fell by 1 against the dollar in May, its largest monthly slide since February39;s 2.8 loss, but it39;s still up 3.1 so far in 2023. Against the euro, sterling gained 2 last month the most in a month since last July. But analysts say this apparent show of strength is something of a mirage.

Britain has the slowest growth and the highest inflation within the Group of Seven economies. The BoE, which many believe was too slow to raise interest rates, will probably have to raise rates again this month, which in theory should give the pound an edge against the dollar.

UK inflation fell to 8.7 in April from a peak of 11.1 in October, while U.S. inflation is down…