Sterling rises vs dollar on UK data, slips vs euro

* Sterling rallies vs dollar on UK data, slides vs euro

* UK June retail sales rise more than forecasts

* Strong euro zone flash PMI pushes euro up vs sterling

By Naomi Tajitsu

LONDON, July 22 (Reuters) - Sterling rallied against the dollar on Thursday after strong UK retail sales data suggested that the economy is improving, while euro zone figures boosted demand for riskier currencies.

The dollar suffered broadly after Federal Reserve Chairman Ben Bernanke on Wednesday said the U.S. economy faced an "unusually uncertain" outlook. [ID:nN21165172]

But sterling fell versus the euro, which gained as a jump in a flash reading of euro zone purchasing managers' sentiment stoked optimism that the euro zone had begun the third quarter on a stronger note than expected.

"Sterling was riding on the coattails of the strong euro zone data, and then the punchy retail sales number led to a tailwind higher in the pound versus the dollar," said Paul Mackel, director of currency strategy at HSBC.

By 1509 GMT, sterling rose 0.6 percent to $1.5265 GBP=D4, recovering from a one-week low of $1.5125 hit on Wednesday.

The pound pushed higher versus the dollar after data showed that UK retail sales received a boost from the World Cup in June as strong sales of electrical goods drove a faster-than-expected 0.7 percent monthly rise. [ID:nLDE66L0O7]

The pound got a boost in early European hours as bids from an Asian account emerged around $1.5180, but resistance was seen near a three-month high of $1.5473 hit on July 15.

"Cable (sterling/dollar) is certainly not overbought but bullish pressure has decreased considerably. Futures volume is less than half that of the peak, when prices were dropping in May and June," Mizuho Corporate Bank technical analyst Nicole Elliott wrote in a note.

The euro EURGBP=D4 rallied 0.6 percent to 84.62 pence, capitalising on a jump in a flash reading of euro zone services PMI to 56.0 in July from 55.5 in June, which easily exceeded expectations for a 55.0 reading. [ID:nLDE66L0G6]

Trade-weighted sterling was at 80.4 =GBP, slightly lower from Wednesday.

UK GDP AHEAD

Thursday's retail sales data suggest consumer spending could give a decent boost to UK GDP growth in the second quarter, a first estimate of which will be released on Friday.

But analysts were cautious about consumption ahead given the prospect of public sector job losses and a rise in value-added tax early next year as the government tightens its purse strings.

Despite such an outlook for demand, Bank of England chief economist Spencer Dale said inflation was not expected to return to its 2 percent official target before the end of next year.

In an interview with The Independent newspaper on Thursday, Dale said the near-term outlook for growth and inflation had "deteriorated" over the past couple of months, partly due to the increase in value-added tax announced in the June budget.

He added that tensions in the financial markets stemming from euro zone sovereign debt concerns had affected the ability of banks and companies to raise cash. [ID:nLDE66L00D]

Minutes from the BoE's latest policy-setting meeting released on Wednesday showed policymakers discussed further easing as well as tightening. They voted 7-1 in favour of keeping interest rates at a record low 0.5 percent, with Andrew Sentance again voting for a 25 basis-point rate rise. (Additional reporting by Tamawa Desai; Editing by Hugh Lawson)