Pound stuck near 2-1/2 mth low vs dlr, BoE awaited

LONDON, May 8 (Reuters) - Sterling was little changed versus the dollar on Thursday, stuck near a 2-1/2 month low against a broadly firmer U.S. currency, as traders awaited a Bank of England policy decision later in the day.

The pound rose against the single European currency, which stumbled across the board after a newspaper reported U.S. and European officials both wanted to see the dollar strengthen against the euro.

The BoE will announce its decision on interest rates at 1100 GMT and most market participants expect the central bank to hold rates at 5 percent, after cutting them by 25 basis points last month.

Many in the market expect a rate cut in June, but analysts acknowledged a small chance of a rate cut this month as recent data showing dismal consumer morale, output and jobs has added to the argument the UK economy is continuing to suffer, which may keep sterling under downward pressure.

"(Weak figures) open the possibility that the bank could move on rates again today, so sterling is likely to stay on the soft side," said Steve Barrow, chief currency strategist at Bear Stearns, adding it may be most vulnerable versus the dollar.

At the same time, he added sterling could get a slight, initial boost if the BoE stands pat.

Sterling traded 0.1 percent lower at $1.9520 <GBP=>, after sliding as far as around $1.9500 to match its weakest level since late February.

Weighing on the British currency was a jump in the dollar after the Financial Times on Thursday reported that U.S. and European policymakers welcomed the dollar's recovery from record lows hit against the euro last month. Click on [ID: nT351863]

The report stung the euro, which fell more than 0.4 percent against the dollar. Versus sterling, the single currency fell roughly 0.4 percent to the day's low of 78.35 pence <EURGBP=>.