(Updates after BOE, ECB rate decisions) * BoE opts for further QE * Cable likely to drop if bigger QE announced * Euro/sterling drops to 5-week low after ECB cuts rates By Anirban Nag LONDON, July 5 (Reuters) - Sterling cut losses against the dollar and rose to a five-week high versus the euro on Thursday on relief that the Bank of England had refrained from injecting a larger-than-expected stimulus to support the struggling UK economy. Investors had priced in a 50 billion pound cash boost, or quantitative easing from the central bank. But there were a few in the market who had been expecting a 75 billion pound injection and possibly a cut in the bank rate, which would be very bearish for the pound. Sterling rose to $1.5601 from around $1.5570 before the BoE announcement, still below this week's high of $1.5723 with offers cited above $1.5650/60. The pound was also aided by China's move to cut rates and was last trading at $1.5580. "This (BoE) easing is mildly positive for sterling," said Paul Robinson, head of European FX research at Barclays. "Even though 50 billion was the consensus forecast, quite a few people saw a risk of it being greater than that. Some people were thinking they might cut the actual interest rate for the first time in a long time." The pound also rose from lows against the euro. The euro fell to a five-week low of 79.78 pence, hurt by the European Central Bank's decision to cut its main interest rate to a record low 0.75 percent and lower the deposit rate to zero. Traders said the euro was now on track to ease to 3-1/2 year lows of 79.505 struck in May. ECB President Mario Draghi will hold a press conference later in the day and there are expectations he may lay the ground for more easing in coming months. "For now we expect the BOE to remain on hold. We continue to expect euro/sterling to range-trade 0.79-0.82," SEB said in a note. "Despite a troublesome and weak outlook for the UK, the euro remains more vulnerable." While more quantitative easing is usually seen by the market as negative for sterling, many analysts expect the pound to gain against the euro as worries about Europe's debt crisis offset looser UK monetary policy. Many also view the BOE's move to ease monetary policy as a pre-emptive one, in contrast to the ECB, on which pressure is building to announce more stimulus and support a euro zone economy that is on the brink of a recession. Still, sterling is likely to struggle against the dollar and higher-yielding currencies like the Australian dollar in the near term as UK data provides more evidence that the economy is in the midst of a protracted recession. Data earlier this week showed the purchasing managers' index for services, which accounts for around three quarters of output, fell to an eight-month low of 51.3 in June. That followed weak PMI surveys on manufacturing and construction this week and suggested the UK economy may have contracted for a third consecutive quarter in the June quarter. (Additional reporting by Nia Williams; Editing by Catherine Evans)

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