* Graphic: sterling and gilt yields http://bit.ly/2dgAXn1
* Graphic: World FX rates in 2017 http://tmsnrt.rs/2egbfVh
* Graphic: Trade-weighted sterling since Brexit vote http://tmsnrt.rs/2hwV9Hv (Adds construction PMI data)
LONDON, Nov 2 (Reuters) - Sterling edged down on Thursday after some chunky gains this week before a Bank of England policy decision that is widely expected to produce the first increase in interest rates in over a decade.
With a rate hike almost entirely baked into the market, analysts will be keenly watching to see whether BoE Governor Mark Carney signals more rate rises in the coming months, an outcome that analysts say could push the British pound sharply higher, or revert to a more cautious stance.
Sterling showed little reaction to a monthly survey of British construction companies released earlier in the day that beat expectations, showing unexpected growth in the sector and further cementing the likelihood of an interest rate hike.
The pound briefly climbed after the data, before edging back to trade down 0.2 percent on the day by 1123 GMT at around $1.3210, some way away from the two-week high of $1.3321 hit the day before.
The Bank's will announce its rate decision at 1200 GMT.
With a mixed economic picture and the continued weight of political uncertainty about the progress of Brexit talks, many analysts are expecting a one-off hike from the Bank.
"You can probably find your favourite 2,000 economists, strategists, and fools, set them all up and they'll tell you there's a dovish hike coming," said Kit Juckes, head of foreign exchange strategy at Société Générale.
The latest Reuters poll strongly supported the view that the BoE will raise base rates to the 0.5 percent they stood at from March 2009 until August last year, when they were halved to 0.25 percent after Britons voted to leave the European Union.
Against a broadly stronger euro, sterling fell 0.6 percent to trade at 88.25 pence, having hit a 4-1/2 month of 87.33 pence in the previous session.
With the BoE expected to raise rates against the backdrop of weaker economic growth than before any other rate hike in the past 20 years, close attention will also be paid to the publication of its quarterly Inflation Report.
"While the extent of division on the (BoE's rate-setting committee) will be important, will it be 7-2, 6-3 or 5-4 in favour of a rate rise, the key test will be what comes after that," Michael Hewson, analyst at CMC Markets, wrote in a note to clients.
"The key test (will be) how the bank sees the UK economy, through the prism of its latest quarterly inflation report," he added, referring to a report the Bank is expected to publish along with its rate decision at midday today. (Reporting by Polina Ivanova; Editing by Jemima Kelly and Keith Weir)