Pound edges lower ahead of retail sales data

LONDON (Reuters) - The pound edged lower versus the dollar on Thursday as investors looked to retail sales data for clues on the likely direction of the next move from a Bank of England torn between slowing growth and rising inflation.

The previous day, investors' rate hike camp took heart from news that Bank's arch hawk Timothy Besley had voted for a rate rise this month, boosting sterling, even as key dove David Blanchflower had as expected called for a cut from the current 5 percent.

But analysts said that with the economy slowing, Besley is unlikely to persuade enough of his colleagues round to his way of thinking anytime soon.

"I don't think there is much chance of a UK rate hike, the markets probably over-reacted to that (the minutes)," said Adrian Schmidt, currency strategist at RBS Global Banking.

"It's unlikely they'll cut as well in the short run. They are quite happy to see a significant slowdown, but it gets to a point when that slowdown becomes too rapid and they'll want to actually moderate it."

Retail sales, due at 9:30 a.m., are seen falling 2.5 percent in June, their steepest monthly decline since the series began in 1986 and reversing much of May's record, hot-weather-related 3.5 percent jump.

By 8:13 a.m., sterling was down 0.25 percent at $1.9925.

The euro rose 0.2 percent to 78.68 pence, recovering from a near-two month low of 78.39 set on Wednesday, though analysts said a weak reading from the German Ifo sentiment survey at 9 a.m. could well send it lower again.

Ahead of the official data, signs from the High Street were far from reassuring.