LONDON, April 26 Reuters Sterling steadied on Friday after rising to a twoweek high against the dollar as markets awaited for key U.S. inflation data for clues on the Federal Reserve39;s next moves.

Against the closely watched declining yen, sterling rose to its highest level in almost 16 years.

It was flat at 1.2510 after rising earlier in the day to its highest against the dollar since April 12, adding to Thursday39;s rally after U.S. data showed economic growth unexpected slowed, while inflation accelerated, which reinforced expectations the Fed would not cut interest rates before September.

The inflation surprise put an even greaterthanusual focus on the release of U.S. personal consumption expenditures PCE price index data for March due at 1230 GMT.

Against the euro , sterling was also about flat, 0.1 on the day at 85.64 pence, both currencies having risen against the dollar after Thursday39;s U.S. economic data.

The pound and the euro reacted perfectly in tandem to U.S. GDP yesterday, said Francesco Pesole, FX strategists at ING.

He added that with U.S. data having a neutral impact, only another round of repricing in Bank of England rates expectations can really stir the pair.

The main focus on Friday was the weakening yen, which fell to a 34year low against the dollar with markets on edge about possible intervention after the Bank of Japan kept interest rates on hold.

Against the Japanese currency, sterling jumped 1.3 to 196.11, having touched its highest…