Sterling slips against the euro

Sterling ended its longest run of gains in seven months versus the euro and struggled to maintain a rally against the dollar as evidence mounted that the UK economy is losing momentum.

The UK currency retreated against 12 of its 16 major counterparts after a February index of UK services, which account for about three quarters of the UK’s output, dropped to an almost three-year low.

“The pound is stalling because the fundamental picture is not solid yet,” said Thu Lan Nguyen, a currency strategist at Commerzbank in Frankfurt.

“We certainly need to see some further improvement in the economic situation, particularly the inflationary picture, in order for the market to really increase rate-hike expectations,” the strategist said.

The UK services report followed data earlier this week showing slowdowns in construction and manufacturing.

That has added to the impact of global market turmoil and concern Britain will quit the EU.

It fell 0.1% to $1.4063 and slipped 0.3% to 77.43 pence per euro.

* Bloomberg