(Reuters) - Sterling hit a three-week low against the dollar on Thursday, extending falls after the previous day's weak UK industrial output raised concerns that the pace of economic recovery may be starting to slow. The dollar also rose broadly on signs Washington was moving towards breaking a stalemate over debt, as well as U.S. Federal Reserve minutes showing that its decision last month not to slow stimulus was a "close call". The Bank of England announces its monthly policy decision at 12 p.m. It is widely expected to leave interest rates and its quantitative easing target unchanged and analysts expect little impact on the pound. Sterling was last down 0.15 percent at $1.5934, having dropped to as low as $1.5914, its lowest since September 18 and well below a nine-month peak of $1.6260 hit in early October. It extended falls after Wednesday's figures showing industrial output fell 1.1 percent on the month in August called into question how much the UK economy can go on strengthening after a recent run of above-forecast data. "A lot of the movement now is because of how drastic yesterday's industrial and manufacturing production figures were," said Sasha Nugent, analyst at Caxton FX. "The figures from the UK recently had a period of consistent strength and this is why sterling rose so far so fast. The industrial production data brought the market back to reality and it's going to be more difficult for sterling." A run of above-forecast numbers lifted sterling nearly 8 percent against the dollar between early August and early October as investors brought forward their expectations of when UK interest rates would rise. Analysts said the pace of sterling's rise had left it vulnerable to any downturn in British economic data. "Market participants should ... be aware by now that the current upswing in UK data will not be sustained at such punchy levels and therefore we continue to recommend investors to tighten their stops on long sterling positions," analysts at Commerzbank said in a note to clients. The pound stayed steady against the euro, however, with traders saying it was helped by reported demand from a large UK company to sell euros for pounds. The euro was at 84.73 pence, staying not far from a five-week peak of 84.875 pence hit on Wednesday.

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