LONDON, Dec 12 Reuters Sterling held steady against the dollar on Monday, as a murky economic growth outlook outweighed positive data for October ahead of the Bank of England39;s next policy decision due later this week.

At 1028 GMT, the pound was down a marginal 0.07 against the dollar at 1.22750. Meanwhile, it fell 0.1 versus the euro to 86.015 pence.

Official data on Monday showed Britain39;s economy rebounding in October a little stronger than expected from September, when output was affected by a oneoff public holiday to mark the funeral of Queen Elizabeth.

Gross domestic product grew by 0.5 after September39;s 0.6 contraction, but fears of a lengthy UK recession are still weighing on sentiment.

The monthly output figure was pretty robust. But on a quarterly basis, output was down 0.3, which suggests that overall the direction of travel is downward, said Stuart Cole, head macro economist at Equiti Capital.

The outlook going forward is looking increasingly difficult, what with CPI still rising, tax hikes and spending cuts to come next April, and interest ratesmortgage rates on the up.

British banks and building societies expect to lend 23 less to home buyers next year, while property website Rightmove said on Friday that average asking prices for newly listed property had fallen by 2.1 this month, the largest December fall in four years.

Given the penchant for homeowning in the UK, house prices are always a good sign of the strength of consumer sentiment and…