* Sterling steady ahead of BoE, ECB rate decisions * Upside potential seen against euro on better rate differentials * BoE expected to hold rates 0.5 pct, no increase in QE this month By Nia Williams LONDON, Dec 8 (Reuters) - Sterling steadied on Thursday, holding within sight of a one-month high against the euro ahead of two central bank meetings widely expected to reduce the premium for holding the single currency amid efforts to quell its two-year debt crisis. The Bank of England is expected to hold interest rates unchanged at 0.5 percent and reaffirm a commitment to loose policy while the European Central Bank is seen cutting its own rates to 1 percent in a bid to stave off a deeper recession. Analysts said developments in Europe would have a greater impact on the pound, with any sign that politicians will make progress in resolving the crisis at an EU summit on Friday likely to boost perceived riskier currencies. The euro was last flat against sterling at 85.34 pence, hovering above the trough of 85.10 pence hit on Wednesday when traders cited support from large flows. This left it on course to target the Nov. 10 low of 84.86 pence, below which would mark the lowest level since March. Against the dollar, the pound was down 0.1 percent at $1.5700, with talk of Asian central bank interest to sell the pound above that level. Technical analysts highlighted resistance at $1.5740, the 55-day moving average, ahead of the late November high at $1.5780. "I don't think the BoE is really going to produce an awful lot of activity today. That said, sterling may gain a bit of ground against the euro if the ECB cuts because on a carry basis there would be an improvement," said Jane Foley, senior currency strategist at Rabobank. "Cable may also see a better day if there's an increased feeling of optimism in respect to ECB actions and political actions. If risk appetite does build, the likelihood is the dollar will suffer and cable will push higher." BOE EXPECTATIONS The Bank of England Monetary Policy Committee is forecast to keep rates on hold at 0.5 percent, while not announcing any increase to its 275 billion pound quantitative easing programme this month. Market players said the rate decision was already factored in to sterling prices, and the minutes of the meeting, released in around two weeks time, would provide a better gauge of when the BoE may resort to another round of quantitative easing. The BoE in October announced it was expanding its asset purchase programme to help boost flagging UK growth. "There will be more asset purchases at some point next year, the UK economy is definitely fragile and needs easing. But we are not expecting anything before year end," said Ankita Dudani, G10 currency strategist at RBS. "BoE members may say let's wait for the EU summit, see what they deliver and also see what impact the October round of QE has had." Although QE would usually be seen as negative for sterling because it involves flooding the market with pounds and reducing demand, Dudani said the UK currency was unlikely to fall significantly as a result. "Now it's more of a case of which central bank has the independence and capacity to do what is needed to help the economy. At least the BoE is able to do what is required," she said. (Editing by Patrick Graham)

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