Pound slides on weak housing and retail

LONDON (Reuters) - The pound slipped on Tuesday, nearing its lowest level against the dollar in nearly three months after data showing a fall in housing and retail sales underlined economic weakness even as inflation risks rise.

The pound hit a three-week low against the euro after the Royal Institution of Chartered Surveyors said its house price balance fell to -95.1 in the three months to April from -79.4 in March.

This marked the widest margin of decline in at least 30 years as prices fell in every region highlighting the depth of problems facing the housing market.

Data from the British Retail Consortium showing a fall in retail sales for a second straight month showed problems are not restricted to the housing market and also pushed the currency lower.

The grim figures precede a report on inflation on Tuesday and analysts said that while an expected price climb may stall the Bank of England's interest-rate cutting cycle, economic weakness stemming from a housing downturn would prompt more rate cuts in the future, pushing sterling lower.

"The market is very sensitive regarding housing data," said Paul Robson, currency strategist at RBS Global Banking.

"Rate cuts are a matter of time ... The bank realises that economic activity and demand are slowing and could cuts rates right now but of course they're worried about inflation."

Sterling fell nearly half a percent to $1.9486, closing in on $1.9441 touched on Monday for the first time since late February.

The euro rose 0.2 percent to 79.68 pence, its strongest since late April.