* Graphic: World FX rates in 2018 tmsnrt.rs/2egbfVh
* Graphic: Trade-weighted sterling since Brexit vote tmsnrt.rs/2hwV9Hv
LONDON, May 2 (Reuters) - Sterling held close to 3-1/2 month lows on Wednesday after Brexit-related news knocked the pound and as traders readied for data on the construction sector for any sign of an April rebound after weakness in the first quarter.
With the dollar rallying and a weak manufacturing survey published on Tuesday, sterling tumbled to its worst level since mid-January, extending a bruising fortnight for the pound in which it has fallen by around 7 cents because of a sudden collapse in expectations of an interest rate rise in May.
Media reports that senior British lawmakers that back Brexit have demanded that Prime Minister Theresa May drops a proposal for a customs partnership with the European Union once it leaves the bloc reignited concerns about a lack of British political unity about Brexit talks and undermined the pound.
“The pound has been under relentless downward pressure. The upturn in Brexit uncertainty surrounding the Customs Union debate is not helping,” MUFG analysts said in a note.
Sterling rose 0.1 percent to $1.3630 against the dollar after earlier falling to $1.3581 in Asian trading.
But against the euro sterling fell 0.2 percent to 88.24 pence per euro, its weakest since mid-March.
Attention now turns to a monthly business survey for Britain’s construction sector, due at 0830 GMT.
“The construction PMI is usually the least interesting of the three indices, but given the weakness of Q1 GDP, the focus on the strength of the rebound in Q2 and the impact of the weather on both, this month’s data is more interesting than usual,” said RBC’s chief currencies strategist Adam Cole.
On Thursday, the survey for Britain’s vital services sector will be published.
Expectations of a Bank of England rate hike have fallen sharply in recent weeks as weaker-than-expected data makes the case for immediate tightening of monetary policy much harder. (Reporting by Tommy Wilkes Editing by Alison Williams)