* Graphic: Sterling and gilt yields bit.ly/2dgAXn1
* Graphic: World FX rates in 2017 tmsnrt.rs/2egbfVh
* Graphic: Trade-weighted sterling since Brexit vote tmsnrt.rs/2hwV9Hv
(Updates story, adds fresh quotes)
By Ritvik Carvalho
LONDON, March 3 Sterling hit a seven-week low on
Friday against a dollar boosted by expectations of an imminent
U.S. interest rate hike, after more UK data, this time from the
dominant services sector, suggested the economy could be running
out of steam.
A weaker-than-expected services Purchasing Managers' Index
on Friday chimed with notes of caution from several top
companies, suggesting the British economy's resilience since
last June's Brexit vote may be starting to fade.
The data came a day after an equivalent survey for the
construction sector showed activity picked up in February but
that the pace of new orders slowed.
Worries about a fresh Scottish independence referendum have
also helped spur six days of losses for the pound against the
dollar, its longest losing streak since December 2015, when
markets started taking the risk of a Brexit vote more seriously
British Prime Minister Theresa May took aim at Scotland's
ruling party on Friday, accusing it of sacrificing both the UK
and Scotland in its "obsession" with securing independence.
The pound fell to a seven-week low of $1.2215 in early
London trade, but had recovered to around $1.2245 by 1650 GMT,
down 0.2 percent on the day.
"Sterling's been in the grip of politics ... and we're
talking about the other side of the equation here, really, and
that's the dollar," said Neil Mellor, currency strategist at
Bank of New York Mellon.
The pound has fallen more than 2 percent against the
greenback this week, with the U.S. currency boosted by hawkish
comments from a string of U.S. Federal Reserve officials that
have led to a dramatic revision of rate expectations. Investors
are now pricing in a 70 percent chance of a March hike.
Speeches from Yellen and Fed Vice Chair Stanley Fischer
later on Friday are widely expected to provide the final clues
to the timing of the next rate hike.
Against a broadly stronger euro, sterling fell 0.6 percent
to 86.15 pence, having traded at a four-week low of 86.40 pence
"The euro is benefiting against the pound from the reduction
in political risk in Europe over the last week or so," said MUFG
currency analyst Lee Hardman.
A poll on Friday for the first time put centrist Emmanuel
Macron ahead of far-right leader Marine Le Pen in the opening
round of the French presidential elections, as conservative
Francois Fillon came under pressure to pull out of the contest.
(Editing by Catherine Evans)