By Elizabeth Howcroft

LONDON, Oct 9 (Reuters) – The pound was steady against the U.S. dollar on Friday, brushing off worse than expected UK growth data as investors became more optimistic about a Brexit deal being reached ahead of a key European Council summit next week.

The pound has been volatile this week on contradictory headlines about how much progress has been made in Brexit negotiations. Both sides have said a deal is still possible.

“The last two weeks have seen some brutal whipsawed price action in sterling,” said Jeremy Stretch, head of G10 FX strategy at CIBC Capital Markets,

“There is going to be that ongoing susceptibility to Brexit headlines but the mood music still seems to be reasonably positive,” he said, adding sterling could test the key $1.30 level again if the risk environment remained constructive.

At 1034 GMT, the pound was at $1.2937, little changed on