The pound was steady at weakened levels against the euro and the dollar on figures showing the UK economy grew more slowly than thought in the third quarter. The office for National Statistics said the economy grew by 0.7 pct in the third quarter, below the previous estimate of 0.8 pct. Annual growth was revised down to 3.2 pct from 3.3 pct. The figures suggest the UK's period of above-trend growth is coming to an end, adding to the argument for UK interest rates to drop sooner rather than later. Michael Saunders at Citigroup said the slower growth "fits with other signs that risks for economic growth lie on the low side of the MPC's base case (which itself is the weakest forecast they have published since 2001)". "As the economy weakens, policy rates are likely to head lower," he said. The Bank of England's Monetary Policy Committee is expected to cut rates at least once next year, following its dovish November inflation report. The first cut could come as early as next month, although most economists predict rates will not fall until early 2008. Last night, BoE rate-setter Rachel Lomax hinted she might lean towards a pre-emptive cut in rates, saying the Bank "can and should respond quickly and flexibly to early signs of the changing economic weather". The pound, which earlier hit a new four-and-a-half year low against the euro of 0.7215 stg in late Asian trade, was edging back down to those lows as the afternoon progressed. The dollar was also stronger against the pound, as well as the euro, recovering from its fall to new euro lows of 1.4966 usd in Asian trade as US economic concerns were magnified by the effect of scant liquidity. The US and Japan are both celebrating public holidays, putting many investors on the sidelines. The prospect of the Federal Reserve Bank cutting interest rates again in the coming months is also likely to put pressure on the dollar. Markets are pricing in a quarter-point cut at December's meeting to follow 0.75 pct points of reductions since the summer, as the economy threatens to slow.