(Updates prices, adds more comment)

By Anirban Nag and Patrick Graham

LONDON, May 14 (Reuters) - Sterling fell to a one-month low against the dollar GBP=D4 on Wednesday, while gilt futures soared after Bank of England Governor Mark Carney doused expectations of near-term monetary tightening.

The growing consensus that the bank would move to raise interest rates from record lows in the first half of next year at latest are behind a year-long march higher for the pound that has taken it to its highest since mid-2009 against the dollar.

But that rise has slowed in recent weeks, with a growing number of analysts saying speculation about a rate rise this year looks overdone given the lack of inflationary pressure across Europe.

Carney, presenting the bank's updated forecasts for the economy, said the euro had edged closer to a rise in rates but the recovery remained in its early stages. The pound sank immediately in response, but then stabilised to trade at around $1.6779 and 81.76 pence per euro late in London trading.

"All that Carney was doing today was putting his hand up to tell the market it was getting ahead of itself, which I think it was," said Jane Foley, a senior currency strategist with Rabobank in London.

"At the same time, the bank is still well in the running to be the second big monetary authority to raise rates and that will provide a pretty decent underpinning for sterling going forward."

A lot will depend on what happens to the dollar over the summer. If U.S. data improves, the solid gains for the U.S. currency predicted by many banks at the start of this year may finally materialise.

Foley said that made it harder to expect sterling to make another charge at $1.70 in coming months. She saw more value in the pound against the euro, hit in recent days by signs the European Central Bank is ready to embrace a package of measures next month to ease monetary policy further and bolster growth.

"Against the euro I still see a grind down to around 80 pence," Foley said.

FLUSHED OUT

The pound had hit a near five-year high of $1.6997 last week as some investors and analysts priced in a late 2014 rate hike. In its report, the BoE said it still saw borrowing costs rising in about a year's time.

The bank lowered its unemployment forecasts for the next two years, but growth and inflation predictions were little changed. It also noted that sterling appreciation was putting downward pressure on inflation.

"Clearly some market participants got ahead of themselves in expecting rates hike by the BoE later this year," said Commerzbank currency strategist Peter Kinsella. "The drop in the pound is seeing some of those positions being flushed out."

Sterling overnight rates dipped across the 2014/2015 strip

GBPOIS=ICAP as investors pushed back bets on when British policy would be tightened. The sterling overnight interbank average (SONIA) curve showed investors pricing in a rate hike in 10 months' time, out from nine months early in the session.

British June gilt futures FLGcv1 extended gains after the BoE report, and were last up 81 ticks on the day at 111.16.

Jobs data also weighed on sterling, traders said.

The unemployment rate fell to its lowest level in more than five years in the first quarter, but the number claiming out-of-work benefits fell by less than expected. ID:nL9N0MN00B

Traders noted that wage growth was also lower than expected.

"Although headline wage growth is still above consumer price inflation, the fact that wages made no headway in March suggests that the recent increase was a flash in the pan, and not the sign of a sustained trend," said Kathleen Brooks, research director at Forex.com.

(Editing by Tom Heneghan)

((anirban.nag@thomsonreuters.com)(+44 20 7542 8399)(Reuters Messaging: anirban.nag.thomsonreuters.com@reuters.net))

Keywords: MARKETS FOREX/STERLING