Pound slides vs euro on weak housing

LONDON (Reuters) - Sterling slipped against the euro and a basket of currencies on Thursday as falling house prices and record-low consumer confidence underlined economic weakness.

Despite its broad losses, the pound rose as much as half a percent versus the dollar, which ran into selling pressure due to weak U.S. economic growth figures and initial jobless claims.

"Cable's really flying right now. It's reacted a lot more to the weak U.S. data than the UK data," said Tom Levinson, forex strategist at ING.

But he said that a stream of data showing a deteriorating housing market and frail economy would make it difficult for the Bank of England to raise interest rates to counter inflation risks, which would sting the pound in the next few months.

"Cable up here is a sell ... overall we're quite negative on the U.K. macro outlook and we would be longer term sellers."

By 2:50 p.m., sterling traded 0.4 percent higher at $1.9890. It touched the day's high of $1.9928 after data showed that the U.S. economy grew at an annual rate of 1.9 percent in the second quarter, less than forecasts of 2.0 percent.

Also pressuring the dollar was a jump in U.S. jobless claims, suggesting the employment market remains weak. U.S. nonfarm payrolls due on Friday could be weak, adding more downward pressure on the dollar, analysts said.

But weak UK data helped the euro to climb roughly 0.3 percent to a session high of 78.95 pence, before pulling back slightly to 78.75 pence GMT. On a trade-weighted basis, sterling slipped 0.1 percent to 93.3.

STERLING RESILIENCE?