By Chris Gothard and John Beresford-Peirse
London, July 12 (Bloomberg) -- The British pound was little changed after reaching a two-week high against the dollar yesterday, amid expectations it will track the euro's movements against the U.S. currency in coming months.
Sterling was trading at $1.4093 compared with $1.4100 late yesterday. Against the single currency, the pound was at 60.83 pence per euro from 60.99. The pound has lost 5.6 percent against the dollar and gained 3.8 percent against the euro this year.
Sterling tends to trade in tandem with the single currency against the dollar because of European trade links and the possibility the U.K. will join the European Economic and Monetary Union in the next few years, analysts said. Britain sells 60 percent of its exports to the 12 nations sharing the euro.
``When there is no economic news the pound's default is to trade with the euro,'' said Simon Hayley, a currency strategist at research firm IDEA Global. ``Europe is the U.K.'s biggest trading partner.'' He sees the pound falling to $1.38 by the end of the third quarter, as the euro drops to 83 U.S. cents.
The British Chamber of Commerce will release its economic survey for the 1st quarter at 11:00 a.m., though Hayley said it wouldn't move sterling.
The outlook for the pound is gloomy because investors will keep favoring the dollar over the euro on perceptions the Federal Reserve has done more than any other central bank to spur economic growth, analysts said.
The U.S. central bank has lowered its benchmark borrowing cost by 275 basis points this year, compared with 75 basis points by the Bank of England and 25 basis points by the European Central Bank.
Sterling may also come under pressure in coming months because of the contrast between the manufacturing and consumer parts in the U.K. economy, analysts said.
A report this week showed house prices rose at the fastest rate in almost two years during the second quarter. Industrial production fell at the most rapid pace in almost four years in May, a report last week showed.