Sterling falls towards all time low vs. euro

LONDON (Reuters) - The pound homed in on an all-time low versus the euro on Friday as expectations of an interest rate cut on the back of a slowing economy led investors to sell the currency.

The pound held at its lowest in more than a year and a half on a trade-weighted basis as news on Wednesday that the Bank of England's Monetary Policy Committee was unanimous on this month's rate cut firmed investor conviction that more monetary easing is imminent.

"The (MPC) minutes are the most persuasive drivers this week. They voted decisively for a rate cut and the accompanying statement was also on the dovish side," said Kamal Sharma, currency strategist at Bank of America.

By 8:23 a.m., the euro was up 0.2 percent versus the pound having touched 72.46 pence, its highest since May 2003 and just shy of the 72.55 pence all-time high. The pound was up 0.2 percent versus the dollar at $1.9865.

On a trade-weighted basis the pound was steady at 98.9, its lowest since April 2006.

The BoE cut rates to 5.50 percent in December and further monetary easing is expected following a string of soft economic data with the current account deficit hitting a record 20 billion pounds.

"Cyclical and structural factors supporting the pound are eroding and a medium term decline for the pound looks likely," Sharma at BoA said.

Investors will look to retail sales data at 0930 GMT for clues on whether problems in the credit sector are affecting consumer spending. A poll by Reuters predicts a rise of 0.2 percent in November from a 0.1 percent dip the previous month.

The GfK consumer confidence measure for December due for release at 1030 will also be watched for signs of weakness. (Reporting by Simon Falush)