May 21 (Reuters) - The pound was within striking distance of its 2-month high versus the dollar on Tuesday but was set to break a seven-day winning streak against the euro ahead of key economic data.

Closely-watched consumer price inflation data is due on Wednesday and "flash" PMI data on British business activity will follow the next day.

Good risk appetite and a slightly more dovish repricing of expectations for European Central Bank monetary path have supported the pound in the last one and a half weeks, analysts said, mentioning its correlation with the U.S. stock index S&P.

Market participants see sterling as riskier than the safe-haven dollar and the single currency.

The pound dropped 0.05% at 85.44 euro per pound, after rising for seven sessions from around 86 pence on May 10.

"Since the last Monetary Policy Committee (MPC) meeting, it has been well understood that the June rate cut scenario depends on this week's CPI and the next one due June 19," said Paul Mackel, global head of forex research at HSBC.

"We maintain GBP-USD is expensive versus what interest differentials imply," he added, recalling that the Bank of England's (BoE) Chief Economist Huw Pill, who has been more guarded about the disinflation, will speak on May 24.

BoE Governor Andrew Bailey said on May 9 that future cuts might need to be more than those markets priced in, but the next day Pill said that betting too heavily on a rate cut at its June rate meeting would be a bad idea.

Policymaker Megan Greene said last week the BoE should wait for more conclusive evidence that inflation pressures are becoming less stubborn before it moves to cut rates.

Sterling rose 0.1% to $1.2715; it hit $1.2725 the day before, its highest level since March 21.

The pound rose around 2% this month as the U.S. dollar fell due to weak growth and inflation figures, while British data was stronger than expected.

In the long term, "our broad disposition toward the pound remains constructive, particularly versus the EUR", said Barclays analysts in their weekly research notes.

"This is because spillovers from a dovish BoE repricing tend to be limited, demand is resilient, and the prospect for closer ties with the EU should trigger a partial, yet sizeable, unwind of the pound's Brexit premium following the next UK general election," they added.

(Reporting by Stefano Rebaudo; editing by Ed Osmond)