Sterling slides on weak UK housing, retail; CPI awaited

LONDON, May 13 (Reuters) - Sterling slipped on Tuesday, nearing its lowest level against the dollar in nearly three months after data showed UK housing and retail sales are falling even as inflation risks rise.

The pound hit a three-week low against the euro after the Royal Institution of Chartered Surveyors said its house price balance fell to -95.1 in the three months to April from -79.4 in March. For story, click on [ID:nL13868662]

This marked the widest margin of decline in at least 30 years as prices fell in every region in Britain. Data from the British Retail Consortium also weighed on the pound, showing retail sales fell for a second straight month as the housing market downturn dampens consumer spending.

The grim figures precede a report on UK inflation on Tuesday and analysts said that while an expected price climb may stall the Bank of England's interest-rate cutting cycle, economic weakness would prompt more rate cuts in the future, pushing sterling lower.

"The market is very sensitive regarding housing data," said Paul Robson, currency strategist at RBS Global Banking.

"Rate cuts are a matter of time ... The bank realises that economic activity and demand are slowing and could cut rates right now but of course they're worried about inflation."

Sterling fell nearly half a percent to $1.9486 <GBP=>, closing in on $1.9441 touched on Monday for the first time since late February.

The euro rose 0.2 percent to 79.68 pence <EURGBP=>, its strongest since late April. The April measure of UK consumer prices, due at 0830 GMT, will be closely watched to see how far rising wholesale prices are being passed on to households. Forecasts are for prices to rise 0.5 percent on the month, for an annual rate of 2.6 percent.

Figures on Monday showed a sharp rise in UK wholesale prices while costs climbed at a record pace. [ID:nL12570299]