* 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 Ritvik Carvalho
LONDON, March 8 Sterling fell to a seven-week
low on Wednesday ahead of a British budget expected to raise
economic forecasts but remain thrifty as finance minister Philip
Hammond targets curbing a big fiscal deficit.
Hammond is due to announce his tax and spending plans for
the year at 1230 GMT, in Britain's first full budget statement
since it voted to leave the European Union last June.
Strong consumer spending made Britain the second-fastest
growing economy in the Group of Seven rich nations in 2016, but
Hammond is unlikely to count on that lasting.
As signs emerge that consumer spending has slowed amid
rising inflation -- driven largely by a fall in the pound of
around a fifth against the dollar -- Hammond has signalled he
will not spend the windfall, instead saving it for what could be
a testy period of negotiations for Britain as it exits the EU.
Sterling has fallen 2.5 percent in the past two
weeks after a run of weaker-than-expected data, with the latest
numbers on Tuesday suggesting the economy is heading for a
slowdown as Britons feel the strain of rising prices.
It fell a further third of a percent on Wednesday to
$1.2160, its lowest since Jan. 17. It was also 0.2 percent lower
at 86.76 pence per euro.
"We believe that signs of some fiscal tightening could bring
the pound under renewed selling interest, bearing in mind that a
reduction in government spending could weigh on the nation's
GDP," IronFX analyst Charalambos Pissouros wrote in a note to
On Tuesday, Britain's House of Lords delivered a defeat to
Prime Minister Theresa May's legislation to trigger Article 50 -
the notification that will formally begin divorce talks with the
"I think the key reason (sterling is lower) is the Brexit
timetable could be under a bit of threat with the amendments the
Lords' have passed," said Alvin Tan, currency strategist at
It was unlikely the budget announcement would have a
material impact on sterling.
"There's been some talk among at least some Conservative MPs
of them voting for the Lords' amendments (which) potentially
could complicate the Brexit schedule."
(Reporting by Ritvik Carvalho; Editing by Angus MacSwan)