Sterling consolidates week's gains as UK data improves

* Sterling steady; TWI eyes biggest weekly gain since June * Pound on track for biggest weekly gain vs euro in 9 months * Brighter UK data eclipses GDP shock from a week ago

By Jamie McGeever

LONDON, Oct 30 (Reuters) - Sterling was steady against the dollar and euro on Friday, generally consolidating its recovery this week after data showed another rise in UK house prices this month and improving consumer confidence.

The pound's rebound from a steep decline triggered by the surprise fall in third-quarter UK output announced a week ago has been strong. It is on track for its biggest weekly rise against the euro in nine months.

Figures from the Nationwide Building Society on Friday showed that British house prices rose for a sixth month running in October to register their first annual gain since early 2008.

And consumer confidence rose in October to its highest since January 2008, after improvements in households' financial situation and view of the past 12 months, a monthly survey by GfK NOP showed. [ECONGB]

The pound's bounce this week, also underpinned by solid U.S. growth figures on Thursday, has lifted trade-weighted sterling to its highest in six weeks, as sentiment toward currencies more closely correlated with global growth and rising asset markets has recovered.

But given the extent of the pound's rebound this week and lack of any major UK economic data or event on Friday, some analysts say the pound may give back some of those gains as attention turns to the Bank of England's policy meeting next week.

"The UK data is a supportive factor ... (but) sterling looks as if it may have an 'inside day' as the market pauses for breath after Thursday's wild price swings," said Russell Bloom, strategist at Action Economics in London.

"But euro/sterling is correcting from oversold levels," he said, adding that the talk of merger and aquisition-related inflows into the UK from earlier this week is tapering off.

At 0850 GMT sterling GBP=D4 was little changed against the dollar at $1.6545. On Thursday it rose above $1.66, its strongest in nearly a week and almost 4 cents up from Monday's trough of $1.6251.

The euro EURGBP=D4 was also flat on the day at 89.56 pence, having traded the previous day as low as 89.12 pence, its weakest since mid-September.

The euro is down 2.7 percent against the pound this week, its biggest decline in nine months.

Sterling's trade-weighted index was fixed at 80.90 <=GBP=>, within sight of Thursday's six-week high of 81.2.

MPC NEXT WEEK

"Over the past day sterling has been stronger than we anticipated," BNP Paribas strategists said in a research note, citing position adjustment on the back of the retracing dollar and its impact on a range of asset classes.

"We have little doubt that the long-term fundamentally based sterling outlook has remained convincingly bearish, but there is a window where sterling could develop a `dead cat bounce'," they said.

Attention now turns to the BoE's Monetary Policy Committee meeting next Thursday, and specifically whether the MPC will expand its quantitative easing programme.

Given the surprise third-quarter UK GDP contraction, speculation has grown the BoE may expand its 175 billion pound asset-buying programme. Quantitative easing, under which the central bank floods the market with cash, has stung sterling in past months.

Median forecasts from a Reuters poll of over 60 analysts, taken Oct 26-28, found roughly two-thirds saying the MPC would announce an increase to its QE spending at the end of its meeting next Thursday, likely by 25 billion pounds.

The last Reuters poll predicted they would stop at 175 billion.