* Graphic: World FX rates in 2020 http://tmsnrt.rs/2egbfVh
* Graphic: Trade-weighted sterling since Brexit vote http://tmsnrt.rs/2hwV9Hv
(Updates rates, news, headline. Adds charts)
By Joice Alves
LONDON, May 7 (Reuters) - Sterling rose versus the dollar
and euro on Friday and was on track for weekly gains against
both, as disappointing U.S. job data added pressure on the
dollar, while traders watched for British local and regional
election results.
The pound rose 0.5% in minutes, to a one week high of
$1.3972 versus the dollar after data from the Labor Department
showed U.S. employers hired far fewer workers than expected in
April.
In earlier trade, sterling was unable to hold on to gains
made on Thursday after the Bank of England slowed the pace of
its trillion-dollar bond-purchasing programme.
But by 1320 GMT, the pound was 0.3% higher at $1.3933 versus
the weakening dollar. It was up 0.2% against the euro
at 86.98 pence.
Traders were also looking for evidence of any political risk
after Thursday's elections.
Of most interest to sterling traders is the Scottish
election, where the pro-independence ruling Scottish National
Party has vowed to call another referendum on breaking away from
the United Kingdom if it wins a majority of seats.
Polls put the SNP significantly ahead of rivals but it could
fall short of an outright majority. Most of the results will be
announced on Saturday.
ING analysts said that a new Scottish referendum "is an
event risk that could hold GBP back, but otherwise an optimistic
assessment from the BOE yesterday should continue to see GBP
supported".
The BOE predicted a sharper rebound in the British economy
thanks to easing COVID-19 restrictions but said it needed clear
evidence of a recovery before tightening policy. It also
predicted that inflation would remain contained even with the
accelerating recovery.
The upgraded growth and inflation forecasts are bringing
some comfort for GBP bulls but the sterling rally in the first
quarter "has already baked in a lot of good news into the
price", said Jane Foley, head of FX strategy at Rabobank.
Sterling had its best quarter since 2015 versus the euro,
gaining around 4.8%. Analysts attributed the move mostly to
Britain's faster vaccine rollout.
But as vaccine push accelerates in the euro zone, Rabobank
expects a slow move lower in EUR/GBP to 84.00 pence in the
coming month, Foley said.
(Editing by Angus MacSwan)