Sterling fell versus the dollar on Monday after a fall in British annual house price inflation to a 22-month low backed the case for more growth-boosting interest rate cuts.

Housing market research company Hometrack said house prices fell by 0.2 percent this month -- their fifth monthly fall. That pushed annual inflation down to 1.4 percent from January's 2.3 percent.

"It's the lowest annual growth since summer 2006 which is a continuation of the fairly bleak news on the UK housing market," said Adam Cole, global head of FX currency strategy at RBC Capital Markets.

The state of the housing market will remain a theme for the rest of the week, with January mortgage approvals -- seen as a forward looking indicator -- and the February house price survey from the Nationwide Business Society.

By 0815 GMT, the pound was down 0.2 percent at $1.9627, with failure to break above key resistance at $1.9750 added to selling pressure.

The euro was steady at 75.40 pence.

However losses in sterling were limited by generally better risk appetite and a rally in Britain's banking stocks.

Royal Bank of Scotland (RBS.L: Quote, Profile, Research) shares jumped nearly 7 percent to a 3-week high on Monday after the Sunday Telegraph newspaper reported the Qatari government was considering making an investment in Britain's second biggest bank.

Shares in Alliance & Leicester (ALLL.L: Quote, Profile, Research) and Bradford & Bingley (BB.L: Quote, Profile, Research) also rallied after the Observer newspaper said they were potential targets for a bid from Lloyds TSB (LLOY.L: Quote, Profile, Research).

Sourced by Reuters.