LONDON, April 12 (Reuters) - Sterling fell to a

five-month low on Friday even as data showed the British economy

was on course to exit its shallow recession, with all major

currencies coming under pressure from a dominant dollar.

The pound was down 0.48% at $1.249, the lowest

since mid-November. It was heading for a weekly loss of 1.1%,

after hot U.S. inflation data this week slashed Federal Reserve

easing expectations, boosting U.S. bond yields and the dollar.

The euro was down 0.12% against the pound at 85.34

pence, a day after the European Central Bank signalled a summer

rate cut was still likely.

Britain's economic output grew by 0.1% in monthly terms in

February, in line with forecasts, while January's reading was

revised higher, pointing to an exit from recession in early

2024.

The bigger domestic news that could inform Bank of England

(BoE) pricing is not due until next week in the form of

inflation and labour data.

Rabobank senior FX strategist Jane Foley said the BoE was

likely preparing for a cut soon, even as the Fed likely holds

fire until it gets inflation under better control.

"They are laying the groundwork for a summer move, whether

that be June or August. It does seem likely that we will have

something," she said.

Money markets are currently expecting about 52 basis points

of interest rate cuts by the BoE this year and they see a 39%

chance of the first cut arriving in June, according to LSEG

data.

That is down from around 68 bps priced in for 2024 at the

start of the week, after a Financial Times article by BoE

official Megan Greene, which warned about persistence in UK

inflation, caused traders to reel in their bets.

Yet the higher-than-expected U.S. inflation has caused

markets to scale back expectations of the first Federal Reserve

cut even further, with the first rate cut repriced from June to

September.

The dollar index, which tracks the currency against

six major peers, hit its highest since November on Friday at

105.82, up 0.5%.