Oct 9 Reuters Sterling fell against a strengthening dollar on Monday but was still within striking distance of last week39;s 112 week high as recent economic data provided some reason for optimism about the UK39;s economic outlook.

The safehaven dollar rose as increased violence in the Middle East spooked markets, after a blowout U.S. jobs report gave the currency a leg up.

Sterling was down 0.4 at 1.2180 after touching its highest level since Sept. 29 on Friday.

Two days earlier, on Wednesday, the pound had retreated to 1.2038, its lowest since midMarch. A weaker outlook in the UK combined with the resilience of the U.S. economy weighed on sterling, amid expectations the Federal Reserve will hike interest rates again while the Bank of England39;s BoE path is more uncertain.

We keep forecasting no further rate hikes by the BoE, but data and events scheduled this week in the UK might affect market expectations, said Roberto Mialich, global forex strategist at Unicredit.

He pointed to the BoE Financial Policy Committee Summary and Record to be published on Tuesday and gross domestic product data on Thursday.

Some analysts argued that last week39;s economic figures from the UK have provided some grounds for optimism.

The final reading of the SP Global UK Services Purchasing Managers39; Index PMI hit an 8month low but was better than a preliminary flash reading of 47.2.

Investors see little chance of another BoE rate hike at the next policy meeting in November, but…