* 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
(Adds details, updates prices)
By Ritvik Carvalho
LONDON, March 7 Sterling touched seven-week lows
on Tuesday after weak consumer spending data added to worries
Britain's economy is slowing as it prepares to trigger divorce
talks with the European Union.
In the few months that followed Britain's vote to leave the
EU last June, robust consumer spending had propped up the
economy, surprising many economists.
But the weak pound - which has dropped nearly a fifth
against the dollar since the referendum - has
contributed to a jump in inflation, and Tuesday's data from the
British Retail Consortium and Barclaycard indicated consumers
may now be feeling the pinch.
Sterling fell as low as $1.2183 in morning trade in London
before recovering to $1.2207 by 1756 GMT, still down 0.25
percent on the day.
The pound also hit a seven-week low of 86.83 pence to the
"After months of positive data surprises, where negative
views on Brexit’s consequences for the UK economy had to be
justified, we could be finally experiencing the rolling-over of
economic momentum in the UK," said Julius Baer economist David
Mortgage lender Halifax also reported signs of a squeeze on
consumers as annual house price growth cooled to 5.1 percent in
the three months to February, the weakest rise since July 2013.
Domestic political developments have added to the negative
sentiment around sterling in recent weeks, with talk of a fresh
Scottish independence referendum, the collapse of Northern
Ireland's government, and potential delays to Prime Minister
Theresa May's Brexit plans all creating uncertainty for
"The run-up into the triggering of (Brexit talks) is having
a negative impact, as have some of the recent data confirming a
deceleration in growth in the first quarter of the year," said
Stephen Gallo, currency strategist at BMO Capital Markets.
British finance minister Philip Hammond will deliver his
budget on Wednesday. He has said he will keep "reserves in the
tank" to see the economy through its looming Brexit challenge,
signalling little room for extra spending despite better news on
"The budget is not likely to look pretty tomorrow, with
Brexit cash required," said Mizuho's head of hedge fund FX
sales, Neil Jones. "Sterling should continue to grind lower."
(Additional reporting by Jemima Kelly; Editing by Mark