Pound pressured but little moved by steady Bank

LONDON (Reuters) - The pound eased against the dollar and euro on Thursday, failing to find any traction even after the Bank of England, in a widely expected move, held interest rates unchanged at 5 percent.

The currency was weighed by a growing view the central bank will have to cut rates eventually to breathe life into an economy seen teetering on the brink of recession. But with inflation a major problem now, nobody expects an imminent rate move.

That was likely to leave the pound largely confined in a range.

"For a couple of months, the market is going to see loads of bearish activity data in the UK but at the same time higher headline inflation, and that keeps sterling range-bound for one to two months," said Chris Turner, head of FX strategy at ING.

The Bank did not explain its decision as is usual whenever it leaves rates steady, but analysts said the on-hold verdict came as no surprise given the twin threats of a slowing economy and rising inflation.

"The market debate is increasingly shifting away from whether the MPC (monetary policy committee) will put rates up, towards the likely timing of the next move down," said Philip Shaw, chief economist at Investec.

By 3:10 p.m., the pound was down 0.4 percent against a broadly firmer dollar at $1.9747, while the euro fetched 79.66 pence, up 0.4 percent on the day.

The pound eased 0.1 percent to 92.6 against the Bank's trade-weighted basis.

Another piece of bad news on the economy came earlier when mortgage lender HBOS said house prices fell 2 percent in June, twice the amount analysts polled by Reuters had expected.