* 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 (Recasts, adds quote, updates prices)
By Patrick Graham and Jemima Kelly
LONDON, July 10 (Reuters) - Sterling traded close to a two-week low on Monday, with a run of lacklustre data casting doubt over the Bank of England’s recent warnings that it is on the verge of raising borrowing costs.
Surveys on Monday showed that major companies have curtailed investment plans and consumers have spent less on their credit cards, adding to a picture of a British economy struggling to regain momentum after a soft start to the year.
A strong U.S. payrolls report on Friday afternoon added to the pain for the pound after unexpected falls in already slow UK construction, manufacturing and industrial output.
That raises the stakes ahead of UK wage and unemployment numbers this week. Poor readings on those could further undermine the credibility of Bank officials’ statements about possible rate increases in the coming months.
Sterling traded as low as $1.2855 on Monday, its weakest since June 28, before edging up to $1.2878 by 1630 GMT. That was still down 0.1 percent on the day. It was flat against the euro at 88.51 pence.
“There is some scepticism in the FX market as to whether the BoE will really follow through on raising rates,” said MUFG currency analyst Lee Hardman.
“There is a little bit of concern over whether the economy has started to slow (and) that’s one of the reasons sterling is still struggling to break above $1.30, alongside the political uncertainty since the election.”
Hardman added that a major point of focus this week would be a speech on Wednesday by BoE Deputy Governor Ben Broadbent. If he hints that rates should be raised in the coming months, that would give sterling a significant lift, said Hardman, and should quieten the Bank’s naysayers.
Many companies and investors had begun to believe the worst of the pound’s post-Brexit referendum sell-off was now behind them. But there are now nerves that a weak government and the impact of a slow departure from Europe could leave the currency exposed over the coming years.
“Little sign of wage growth could trigger a BoE reality check,” said ING analyst Viraj Patel.
“With markets still pricing in around a 45 percent chance of a rate hike later this year, we continue to believe that a dovish repricing – and a move lower in short-term UK rates – remains the key downside risk to sterling in the near-term.” (Editing by Raissa Kasolowsky and David Goodman)