* Full data on
* Strategists scale back forecasts for sterling depreciation
* Austerity, weak demand seen as headwinds for GBP
* Pound seen at $1.50 in 12 months, to strengthen vs euro
By Andy Bruce
LONDON, Aug 4 (Reuters) - The pound will depreciate against the dollar more slowly than thought a month ago, according to a monthly Reuters poll of 60 strategists who upgraded their short and long-term forecasts for the second survey running.
After news last month the UK economy grew at its fastest pace in four years in the second quarter, respondents upped their median one-, three- and six-month sterling/dollar forecasts by around four to five cents each.
But the overall trend was still one of modest sterling depreciation, as fiscal austerity measures and worrying signs of weak domestic demand are expected to temper recovery from Britain's worst post-war recession.
"In light of a mixed bag of domestic news sterling is unlikely to sustain the recent positive run," said Niels Christensen of Nordea.
"Slower growth is waiting down the road and is bound to make life a little difficult for sterling during the autumn."
Foreign exchange strategists saw the pound slipping to $1.53 in three months, $1.51 in six and $1.50 in a year's time, compared to equivalent median forecasts of $1.47, $1.46 and $1.49 in the July poll.
Not all respondents thought sterling would depreciate against the dollar. Seventeen saw sterling at or higher than its current level around $1.59 in 12 months' time.
"Sterling should continue to outperform the other FX majors mostly in the wake of the tough UK emergency budget and better data at home," said Roberto Mialich of UniCredit MIB.
"Cable should progressively head towards the 1.60 area in the medium term," he added.
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For graphics on euro sterling forecasts, click:
http://r.reuters.com/kam33n
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GROWING PAINS
The UK economy's surprising growth of 1.1 percent in the second quarter -- nearly twice as strong as the market consensus -- scuppered the July poll's one-month forecast of $1.50.
On Wednesday, cable traded at around $1.59, bolstered by strong earnings at British banks and broad dollar weakness induced by clear signs the U.S. recovery is slowing.
The prospects for Britain's economy over the coming quarters also look uncertain.
A purchasing managers' index (PMI) survey on Wednesday showed Britain's dominant services sector grew at its slowest rate in 13 months in July, marked by slowing growth of new orders and a return to job cuts.
The Bank of England's August rate-setting meeting also began on Wednesday and the latest PMI data are unlikely to convince policymakers to start hiking interest rates from their record low 0.5 percent soon, despite strong second-quarter growth.
"Technically we think GBP/USD is overbought and due for some profit taking as the BoE reiterates that the economy still faces significant challenges from public expenditure cutbacks and credit rationing," said Kenneth Broux of Lloyds Banking Group.
Strategists retained their forecasts for modest sterling appreciation against the euro. They saw the euro weakening slightly from current levels around 83 pence to 80.5 pence in a year's time.
Like Britain, economic data in the euro zone surprised largely to the upside last month, but economists see the 16-nation bloc's economy underperforming the United States and UK as austerity measures intensify and domestic demand weakens.
The latest poll also revealed an expectation that cable trade would be slightly less volatile this month, based on calculations derived from the standard deviation of forecasts.
It implied annualised sterling volatility easing to 9.5 percent in August, from an actual 10.6 percent in July. (Polling by Bangalore Polling Unit; Editing by Susan Fenton)