CAIRO, Oct 20 (Reuters) - Egypt's pound held steady at a central bank dollar sale on Monday, showing little reaction to Moody's decision to raise the nation's credit rating outlook to stable from negative.

Moody's cited a more stable political and security situation and signs of economic recovery for its decision, but kept the rating at Caa1 saying government finances are still too weak.

The bank said it sold $37.6 million at a cut-off price of 7.1401 pounds per dollar on Monday, unchanged from the last sale on Thursday.

The rates at which banks are allowed to trade dollars are determined by the results of central bank sales, giving the bank effective control over official exchange rates.

In the unofficial market, the pound was trading at 7.47 to the dollar, weaker than Thursday's rate of 7.45 to the dollar, one trader said. Another trader said the pound was trading at 7.475 at midday on Monday. The pound has been steadily weakening in the unofficial market for just over a week.

One Cairo-based foreign exchange trader told Reuters demand for the dollar dropping off during the Muslim Eid al-Adha holiday from Oct. 5 to 8. "Demand resumed after the holiday, this is why the pound weakened further against the dollar."

The rate for dollar sales has stayed in a tight range since the beginning of June, after the bank allowed the pound to weaken in May. The central bank offered $40 million on Monday.

(Reporting by Maggie Fick; Editing by Ruth Pitchford and Susan Thomas)