LONDON, Nov 8 (Reuters) - The pound held on Monday near five-week lows touched last week against the dollar and euro, pressured by ebbing rate hike bets and a possible British confrontation with the European Union over post-Brexit Northern Ireland trading arrangements. Markets are now pricing an interest rate rise at the Bank of England’s December meeting but uncertainty remains high, after they were wrong-footed last week by policymakers who kept rates on hold at 0.1%. Prior to the BoE meeting, markets had priced two rate hikes by year-end. The on-hold decision sent sterling to its biggest weekly loss against the dollar since August at almost 1.5% while against the euro it fell the most since April. The decision will have left many speculators licking their wounds; data for the week to last Tuesday showed $1.3 billion worth of bullish pound positions had built up ahead of the BoE meeting. The data from the U.S. Commodity Futures Trading Commission shows a swing from a net “short” a month ago as the BoE seemed to guide rate expectations higher. Sarah Hewin, senior economist at Standard Chartered, said that while the European Central Bank, Federal Reserve and the BoE had all been more dovish than anticipated, “the policy stance of the ECB and Fed had been clearly signalled and signposted. “But for the BoE, the signals were very unclear and that’s why sterling took such a hit,” she said. “Sterling upside in the near-term is going to be limited as there is uncertainty being built into policymaking from the BoE.” The pound flatlined against the dollar by 0910 GMT at $1.349, holding just off a $1.3425 low hit on Friday. That was a five-week low and a shade off the one-year low of $1.3412 hit at the end of September. Against the euro too it traded flat at 85.78 pence, having fallen last week as low as 85.950. Sterling is also feeling some pressure from the rhetoric around so-called Article 16, which allows Britain or the European Union to take unilateral action if they deem the deal governing post-Brexit trade is hurting their interests. Britain has threatened to invoke Article 16 around Northern Ireland trade arrangements, and Ireland’s foreign minister said on Sunday the UK government appeared ready to do so. The EU felt Britain wanted to collapse the talks by “deliberately asking for what they know they can’t get”, he added. Risk reversals, derivatives that give investors the right to sell an asset, show higher demand for put options on the pound than for calls which allow holders to buy the asset. Reporting by Sujata Rao; editing by Emelia Sithole-Matarise