* Sterling slides as BoE minutes increase risk of more QE * Minutes show 2 votes for a bigger rise in QE in February * Euro jumps through key level to 2-mth high of 84.34 pence * Pound falls 0.5 pct vs dollar, could fall towards $1.5644 By Jessica Mortimer LONDON, Feb 22 (Reuters) - Sterling fell to a two-month low against the euro on Wednesday after Bank of England minutes unexpectedly showed two policymakers voted for an even bigger increase in quantitative easing than the bank implemented this month. The BoE's David Miles and Adam Posen voted to pump an extra 75 billion pounds into the economy instead of 50 billion, increasing the possibility that the central bank will opt for more easing later in the year. Traders said some in the market had positioned for the risk of one or two policymakers voting for no QE at all after this month's BoE inflation report predicted the economy would improve, dampening expectations of further stimulus. The surprisingly dovish minutes helped propel the euro through key levels to 84.34, topping the 2012 high of 84.09 pence and the late December high of 84.22 pence and potentially paving the way for a move towards 85 pence. "The minutes have made more QE more likely than the market had anticipated, and it came as a surprise, which is why there's been a fairly big move in sterling," said Geraldine Concagh, economist at AIB Group Treasury in Dublin. "They showed appetite for more QE is probably stronger than suggested by the inflation report, which is more of a consensus view". The 84.09 pence line had been a key level for the euro, which failed repeatedly to breach it since the end of December. The next level of resistance stood at the 100-day moving average around 84.78 pence. The euro was last at 84.18 pence. However, the euro's gains could be limited due to concerns the euro zone still has many hurdles to clear after finally agreeing on a second bailout package for Greece this week. Against the dollar sterling fell around 0.5 percent on the day to hit $1.5696, its lowest in nearly a week and well below an earlier high of $1.5816. Further losses could see it target the mid-February low of $1.5644, though traders cited solid demand to buy the currency just below $1.5670 which could temper its falls. "The fact that there was no vote (in the BoE minutes) for 25 (billion) at all or even zero was interesting, and it does suggest that maybe a final 25 billion may be in the pipeline for May," said George Buckley, economist at Deutsche Bank. Recent UK data suggested the economy has picked up at the beginning of this year after contracting in the fourth quarter. The February BoE inflation report predicted growth would improve later in the year and inflation would drop close to 2 percent in two years. BoE deputy governor Charles Bean echoed this view on Tuesday, saying Britain's economy looked set for a modest recovery. Policymakers will remain cautious, however, given that the economy could be very vulnerable to any worsening of the euro zone debt crisis or to a further rise in oil prices. (Additional reporting by UK economics team)

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