Sterling up on short covering before UK GDP data

* Sterling rises on short covering ahead of UK GDP data

* Selling on earlier data jitters seen overdone

* Q3 UK GDP data due at 0830 GMT, growth seen slowing

LONDON, Oct 26 (Reuters) - Sterling rose broadly on Tuesday ahead of a reading of UK economic growth, boosted by short covering after the pound stumbled the previous day on speculation the data may come in much weaker than expected.

The pound recovered after a slide on Monday to its weakest in nearly seven months against the euro left many investors short of the UK currency ahead of figures for third-quarter gross domestic product due at 0830 GMT.

Forecasts are for a 0.4 percent rise in growth in July-September, slowing from a 1.2 percent rise in the previous quarter. [ID:nLDE69O0UG]

"Some forecasts have been pessimistic, although the consensus is for a weaker figure than in Q2," said Ian Stannard, currency strategist at BNP Paribas.

"The market had gotten ahead of itself (in selling sterling) ahead of the data."

Analysts said a reading in line with forecasts may provide initial support to sterling, but added they expected growth to slow even more in future as austerity measures begin to bite.

This may further fuel speculation of additional quantitative easing by the Bank of England, which analysts expect will put selling pressure on the pound.

By 0739 GMT, sterling GBP=D4 had risen 0.4 percent on the day to a session high of $1.5804, pulling back from a slide to $1.5657 on Monday.

Providing support for the UK currency was the $1.5650 level, roughly a one-month low hit last week and its 55-day moving average on Tuesday.

While the pound has approached the average numerous times in the past week, it has managed to close above it, and the average was seen buffering against a move lower in the near term.

The euro EURGBP=D4 fell 0.4 percent to the day's low of 88.35 pence, retreating from 89.41 pence hit on Monday, its strongest since late March.

Sterling has risen against the dollar since September on the back of broad selling of the U.S. currency on speculation of more quantitative easing by the Federal Reserve.

At the same time, the pound has suffered versus other currencies, pushing its trade-weighed index to a five-month low on Monday, on speculation the BoE may also inject more cash into the market to help boost the economy.

Tuesday's GDP data is expected to show a sharp slowdown in growth after the economy's surprisingly strong expansion April-June, and some in the market believe this will increase the argument for more QE in the near term.

"The (BoE) committee appears to have a bias towards further easing, and an outturn much below our forecast would, in our view, significantly increase the likelihood of a QE extension at next-week's meeting," Barclays Capital analysts said in a note. (Editing by Catherine Evans)