* Pound to hold recent gains against dollar
* 12-month forecasts in wide range of $1.32 to $1.87
* Sterling to strengthen against euro over the year
By Jonathan Cable
LONDON, July 2 (Reuters) - Sterling is seen holding around its current 8-month highs against the dollar over the coming year as the British economy eventually emerges from a deep recession, a Reuters poll showed.
The monthly poll of forecasts from over 60 dealers and analysts saw the pound trading at $1.61 in three months. This is above the three-month forecast of $1.57 in last month's poll but down from the $1.64 it was trading at on Thursday.
Most of the responses were collected after revised figures showed the British economy shrank at its fastest pace in over 50 years in the first three months of 2009.
The pound was seen gaining a little strength over the year, at $1.63 in 6 months and $1.62 in a year, higher than the respective $1.55 and $1.61 forecast last month.
"Prospects of more global risk appetite in the future should pave the way to a firmer cable," said Roberto Mialich, foreign exchange strategist at UniCredit and the most consistently accurate forecaster in Reuters polls last year.
Sterling has climbed against the greenback as a powerful rally in world stock markets has prompted traders to dump the dollar in favour of higher-risk currencies.
The pound hit a 23-year low of around $1.35 in January but has since rallied, hitting an 8-month high of over $1.67 on Tuesday.
"The rally in pound/dollar above $1.65 has forced some participants to cover their short positions, but the lack of conviction in stocks and resistance around the 1.66 area could make it difficult for pound/dollar to break higher," said Kenneth Broux at Lloyds TSB.
The UK economy is in a deep recession and the Bank of England, which has cut interest rates to just 0.5 percent, has begun a programme to inject 125 billion pounds directly into the money supply.
The BoE is expected to leave rates unchanged when it meets next week and is likely to eventually spend the full 150 billion pounds on asset purchases which has been authorised by the government, muddying the waters for the pound.
Forecasts in the poll reflected this and were wide, ranging from $1.32 to $1.87 in a year, but all a long way from the $2.10 the pound was trading at towards the end of 2007.
Sterling volatility on a one-month annualised basis against the dollar is seen dropping to 10.4 percent from the 14.9 percent seen in June. The divergence of forecasts in Reuters polls offers a leading indicator of exchange rate volatility.
EURO FALLS
The pound will also firm against the euro over the year, strategists predict, having nearly reached parity in December. Cross rates calculated by Reuters see the euro at 85 pence in six months and 84 pence in a year.
This compares with 86 pence and 85 pence respectively in the June poll. Sterling reached a 6-month high against the euro at the end of last month.
"We still see the principal areas of weakness as those countries reliant on manufacturing, and that is the euro zone and not the UK. And for that reason euro/sterling can rebuild some downside momentum as we go into the second half of the year," said Adam Cole at RBC Capital Markets.
British GDP shrank 2.4 percent in the first quarter but the 16-nation euro zone is also in the throes of a deep recession, having shrunk by 2.5 percent in the same period.
Analysts say the worst is now past for Britain and see a return to growth in the last quarter of this year. (Polling by Bangalore Polling Unit; Editing by Ruth Pitchford)