Sterling mired at 2-mth low vs dlr on UK rate view

LONDON, May 9 (Reuters) - Sterling fell to its lowest in over two months against the dollar on Friday as investors looked past the Bank of England's decision to hold rates steady this month and focused on the high possibility of an easing in June.

The BoE's monetary policy committee, faced with rising inflation and a sharp economic slowdown, left borrowing costs at 5 percent on Thursday after a 25 basis point cut last month.

But a welter of poor British data from housing to retail sales has left analysts convinced a cut is likely next month, potentially eroding the pound's yield appeal, with more bad news economic seen sapping sentiment further.

"From a currency perspective you could have argued that the BoE could have got it (rate cut) out of the way rather than delaying the inevitable by not moving this week," Rabobank markets strategist Jeremy Stretch said.

"One suspects that come the quarterly (inflation) bulletin next week, the ground will be sufficiently prepared for the June rate cut. I wouldn't say sterling is falling off a cliff but it's certainly on a steep slope," he added.

By 1410 GMT, sterling was down 0.4 percent on the day at $1.9470, having hit $1.9460 earlier -- last seen on February 21 <GBP=>. The euro was up 0.6 percent at 79.26 pence <EURGBP=> edging closer to last month's record high struck at 80.98 pence.

The bank's quarterly inflation report is due out next Wednesday, while further clues on the economic outlook will also come with consumer price index data for April also out next week.

Most analysts polled by Reuters before Thursday's decision predicted rates would fall to 4.75 percent in June [BOE/INT]. (Reporting by Veronica Brown; editing by David Christian-Edwards)