Sterling dips to one-month low against the euro, UK-Ireland talks in focus
UK PM Johnson to meet Ireland's Varadkar in crunch talks
Sterling dips to 1-month low vs strong euro
Trade-weighted sterling also at 1-month lows
Data suggests UK will dodge pre-Brexit recession
Graphic: World FX rates in 2019 http://tmsnrt.rs/2egbfVh
Graphic: Trade-weighted sterling since Brexit vote http://tmsnrt.rs/2hwV9Hv
Updates with data, comment, prices and Carney comments
By Elizabeth Howcroft
LONDON, Oct 10 (Reuters) - Sterling dipped to a one-month low against a broadly stronger euro on Thursday, with investors focused on a high-stakes meeting between the British and Irish leaders just three weeks before Britain is due to leave the European Union.
A flurry of British data, including gross domestic product and industrial production figures, had little impact on the pound, which has been driven primarily by politics as the scheduled Brexit date looms closer.
Prime Minister Boris Johnson will meet his Irish counterpart Leo Varadkar in a last-ditch attempt to revive the British proposal for a Brexit deal that the European Union says is inadequate.
"Anything that keeps hopes of a deal alive into next week would lift the pound," said Adam Cole, chief currency strategist at RBC Capital Markets, who thinks that there is an 80% chance of Brexit being delayed due to a deal not being reached before the October 31 deadline.
Cole said the market was already priced for a negative conclusion to the meeting, although there may be a "small knee-jerk move lower" as residual hopes for a deal fade.
"If the meeting goes badly the market probably takes the probability of a deal close to zero. Then, realistically, we should start to focus on what the outcome of the highly likely election will be," Cole said.
Johnson has said Britain will leave the EU on Oct. 31, deal or no deal, but parliament has passed a law requiring him to request an extension if he fails to reach a divorce agreement. Any delay is expected to be followed by an early election.
The pound rose 0.4% against a broadly weak dollar, last trading at $1.2255 GBP=D3, above one-month lows hit earlier this week just below $1.22.
Versus a stronger euro, sterling was a touch softer on the day at 90.04 pence, after touching a one-month low of 90.10 pence EURGBP=D3.
The pound also fell to a one-month low against a trade-weighted basket of currencies published by the Bank of England GBPTWI=BOEL.
The British currency has been driven by Brexit headlines again this week. It jumped on Wednesday after reports of a breakthrough on the vexed issue of avoiding customs checks on the Irish border and then gave up its gains as hopes of progress on the key sticking point for a Brexit deal were dashed.
Thursday's data calmed fears that the UK is approaching a technical recession, defined as two successive quarters of negative growth.
GDP in the three months to August was 0.3% higher than in the previous three-month period, beating all forecasts in a Reuters poll of economists. However, economic growth in August dropped by 0.1% on the month against economists' average forecast for it to hold steady.
"The risk of a no-deal Brexit every few months is weighing on both investment and consumer spending," said Andrew Wishart, an economist at Capital Economics in a note.
Wishart suggested that lowered expectations for GDP growth may prompt the Bank of England to cut interest rates.
The Bank of England's Mark Carney said that UK data are fairly volatile and that Thursday's figures are consistent with a picture of soft underlying growth.
Carney added that sterling remains more volatile than usual because of the wide range of Brexit outcomes.
Expectations for a Bank of England rate cut have risen in recent weeks, with markets fully pricing in a 25 basis point cut by May 2020 BOEWATCH.
(Reporting by Elizabeth Howcroft and Dhara Ranasinghe; Editing by Alison Williams and Gareth Jones)