Sterling falls despite robust UK house data

LONDON, May 19 (Reuters) - Sterling fell against the dollar and euro on Monday, shrugging off a robust housing market survey, with sentiment staying heavy due a recent run of poor data and expectations for the UK economy to slow further.

Asking prices for property in England and Wales hit a record high in May and house price inflation accelerated, a survey from property website Rightmove showed, despite expectations for a much weaker housing market this year [ID:nL1635815].

Economists are predicting falls in house prices of about 10 percent this year and Bank of England policymaker David Blanchflower has warned prices could dive by about one-third unless aggressive, immediate action is taken.

At the same time, interest rates are unlikely to come down fast given worries over inflation after a decade in which house prices nearly trebled.

As growth slows and inflation rises, the pound has suffered from expectations of economic misery ahead, falling to three-month lows versus the dollar last week and hovering near record troughs against the euro.

"The UK data out overnight hasn't had any major impact at all...in general the downside risks remain. Confidence will be undermined by the high inflation, low growth outlook that has been painted by the Bank of England," said Geraldine Concagh, economist at AIB Group Treasury in Dublin.

By 1357 GMT the pound was down 0.28 percent on the day at $1.9510 <GBP=>, having hit its lowest since late February last week at $1.9363. The euro was up 0.1 percent at 79.74 pence -- staying fairly close to last month's record high at 80.98 <EURGBP=>.

Analysts said pressure on sterling was unlikely to ease ahead of key events this week including Wednesday's Bank of England minutes from its last policy meeting and key UK retail sales numbers on Thursday.

Even though expectations for a June interest rate cut from the current 5 percent have now been largely unwound, the pound has found little relief on the policy front because credit crunch worries are strangling confidence. Some analysts are braced for recession.