RTRS:Sterling near 1-month low vs euro before BoE, PMI data
* Sterling near 1-mth low vs euro, hits 7-wk trade-weighted low
* Vulnerable due to risk of more QE from BoE
* BoE decision at 1100 GMT, UK services PMI also awaited
LONDON, June 7 (Reuters) - Sterling hovered near a one-month low against the euro and dropped to a seven-week trough against a trade-weighted basket of currencies on Thursday, weighed down by expectations that the Bank of England could opt for further monetary easing.
Ahead of the decision, traders will be watching the UK purchasing managers' survey on the dominant services sector at 0828 GMT.
A poor number would add to speculation of more quantitative easing from the BoE, especially after the equivalent survey on manufacturing last week was surprisingly weak.
The BoE announces a policy decision at 1100 GMT. Although a majority of analysts believe it will leave both interest rates and its quantitative easing targets unchanged, some expect it may raise asset purchases to aid a flagging economy.
Policymakers will also be concerned that the euro zone's worsening debt crisis is likely to drag on the UK economy.
The euro was up 0.1 percent against the pound at 81.23 pence, not far from a high of 81.405 hit earlier this week.
Sterling's falls against the euro helped knock its trade-weighted index down to 82.4, its weakest since mid-April, according to Bank of England data.
"The pound has somewhat underperformed recently because there has been increased speculation that the Monetary Policy Committee may implement further asset purchases. And there is a decent probability that they will," said Michael Derks, currency strategist at FXPro.
He said more QE would weigh on the pound in the near term, but further out it had room to make further gains against the euro as the debt crisis prompts investors to seek alternatives to euro zone assets.
Services PMI was forecast to fall to 52.5 in May from 53.3 the previous month, although this would still leave it above the 50 mark that separates growth from contraction.
Against the dollar sterling also fell, trading down 0.3 percent at $1.5440, off a high of $1.5516 hit on Wednesday.
The dollar could come under pressure later in the day on speculation that U.S. Federal Reserve Chairman Ben Bernanke could hint at the possibility of more monetary easing in a testimony later in the day.
On Wednesday, the vice chair of the Fed, Janet Yellen, laid out the case for more easing, citing "a number of significant downside risks to the economic outlook". (Editing by Mark Heinrich)
