Dec 20 Reuters Sterling held up against the dollar on Friday but was set to end the week lower after coming under pressure from divided Bank of England policymakers39; views and a U.S. Federal Reserve that is now more reluctant to lower interest rates.

The pound was flat against the dollar at 1.2500 , after it slipped to a onemonth low of 1.2475 earlier in the day.

Sterling was set for a 0.8 weekly fall, its second week of losses against the dollar.

The BoE held its main interest rate unchanged at 4.75 on Thursday but policymakers had become more divided about whether rate cuts were needed to tackle a slowing economy.

In a surprise to markets, three of the BoE39;s nineperson Monetary Policy Committee had voted for a quarterpoint rate cut.

Traders now price in roughly 60 basis points bps worth of British rate cuts next year, compared with around 45 bps just before the decision.

The split decision dented the outlook for sterling, one of the year39;s best performing major currencies against the dollar, while bringing a reprieve to Britain39;s battered government bond markets.

Pepperstone strategist Michael Brown saw further cuts as likely next year, given that servicesector inflation should cool and that there is a risk unemployment rises.

My expectation is that the BOE will probably deliver 100 basis points at a minimum, and maybe even more, he said.

I think the path of least resistance for the pound, against both the dollar and the euro, is lower. Certainly…