Sterling slips against euro as economic woes weigh

LONDON, May 16 (Reuters) - The pound fell versus the euro on Friday with investors, worried by a toxic combination of high inflation and slowing growth in Britain, wary about the currency.

Sterling has been on the back foot this week after the Bank of England delivered a bearish prognosis on British economic prospects in its quarterly inflation report on Wednesday.

The report showed that inflation is set to remain stubbornly high in the coming months, limiting the central bank's ability to act to bolster an ailing economy with rate cuts.

"Usually higher rates are associated with being good for a currency, but they are seen as being harmful for growth in the UK which will be harmful for the currency," said Tom Levinson, currency strategist at ING.

By 0750 GMT the euro was up 0.3 percent at 79.49 pence <EURGBP=>. The pound was up 0.1 percent at $1.9492 <GBP=>.

The pound earlier got a slight boost against the dollar as traders said stop-loss levels at around $1.95 were breached, but the currency is well off the $2 level last seen less than a month ago.

Before the inflation report, the Bank of England was widely seen as cutting rates by 25 basis points to 4.75 percent in June, but a Reuters poll conducted after the report found a majority predicting it would hold off from reducing them until the third quarter [BOE/INT].

(Reporting by Simon Falush) (Editing by Gerrard Raven)