• Sterling ebbs vs euro as market eyes potential ECB move
• Pound steady versus dollar near 200-day moving average
• Investors look ahead to second reading of UK Q2 GDP

By Nia Williams

LONDON, August 20 (Reuters) - Sterling dipped versus the euro on Monday on signs the European Central Bank may be firming up a strategy for containing the debt crisis, with losses seen capped by last week's better UK economic data.

Germany's weekly Spiegel magazine reported over the weekend that the ECB may set an interest rate threshold above which it could step in to buy sovereign bonds.

The news reinforced speculation the ECB could be readying itself for fresh action to contain the debt crisis, and drove broad demand for the single currency.

The euro rose to a session high of 78.71 pence against the pound, and was last trading up 0.1 percent at 78.64.

With no major UK data scheduled for Monday, analysts said trade in the pound could be muted, with direction driven by moves in the euro against the dollar.

"What happens in sterling very much depends on other developments in the euro zone. The ECB outlook is at least as important as domestic news," said Jane Foley, senior currency strategist at Rabobank.

The main focus for sterling investors this week will be the second estimate for second quarter gross domestic product due for release on Friday.

Many market players were expecting GDP to be revised up from an initial reading of a 0.7 percent contraction after much stronger than expected retail sales data last week.

Those expectations helped sterling hold steady against the dollar at $1.5709, within sight of resistance at its 200-day moving average at $1.5716.

It shrugged off Rightmove data showing renewed weakness in the housing market in August.

"There should be good short-term support at $1.5640, and with an upward revision in Q2 GDP likely later in the week, we would be wary of getting negative on sterling," Lloyds analysts said in a note.

(Editing by John Stonestreet)

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