* 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
By Jemima Kelly
LONDON, March 2 Sterling slipped to a six-week
low against the dollar on Thursday after data painted a mixed
picture of Britain's economic outlook, with the construction
industry picking up slightly in February but new orders slowing.
Data also showed growth in housebuilding cooled to a
six-month low and commercial construction activity contracted
for the first time in four months, though this was outweighed by
an improvement across civil engineering firms.
They followed weaker-than-expected figures from the
manufacturing sector on Wednesday, and data suggesting Britain's
economy will slow after defying the shock of last year's Brexit
vote, with consumers turning more cautious about borrowing.
Uncertainty over the prospects for Britain's economy as it
breaks away from its main trading partner has wiped off almost a
fifth of sterling's value against the dollar, and
traders say developments around Britain's departure from the
bloc will continue to be the main driver for the pound.
Prime Minister Theresa May suffered a defeat in Britain's
upper house of parliament on Wednesday, with members voting for
a change to her Brexit plan that says she can only trigger
divorce talks if she promises to protect EU citizens' rights.
The vote was a blow to May, who had hoped to pass her Brexit
bill without changes, and it will push back the earliest date
she can formally launch the process of Britain's departure from
the EU to around March 13. But it had no discernable impact on
"If she can trigger Brexit as per her deadline, it may push
sterling even lower as this will send the message that Theresa
May is in full control and her hard Brexit is taking shape,"
said Think Markets market analyst Naeem Aslam, suggesting a
level of $1.18 for the pound in that scenario.
"On the flip side, if she cannot deliver this on time, this
could be a positive thing for sterling, and the currency could
rally all the way to $1.28, with a potential target of $1.30 a
realistic target as well."
Sterling slipped a quarter of a percent on Thursday to
$1.2259 against a broadly stronger dollar, having traded at
around $1.2280 before the construction data.
Against the euro, the pound hit a two-week low of 85.90
"We expect euro/sterling to move even higher in coming
months, ahead of and after the triggering of Article 50," wrote
currency strategists from Danske bank, who have 87 pence per
euro as their three-month projection.
"That said, euro/sterling is not only affected by political
uncertainty in the UK but also in Europe, not least due to the
French presidential election, which may put downward pressure on
euro/sterling if Marine Le Pen gains momentum in polls."
(Editing by Alison Williams)