Sterling falls against euro

The pound fell to its lowest level against the dollar in over a week as construction became the latest sector to signal Britain’s economy is losing momentum, with the UK heading for a referendum that may push it out of the world’s largest trading bloc.

Sterling also slid versus the euro after Markit Economics said its construction gauge fell to 52 last month, compared with the 54 median prediction of economists.

The currency pared losses against the dollar after a private report showed lower-than-forecast US jobs gains in April.

The pound, which briefly erased its 2016 losses against the dollar on Tuesday, has now reclaimed its place as the worst-performing Group-of-10 currency.

The declines are partly driven by investors pricing in the prospect of economic disruption if the UK votes to leave the EU next month.

“There are risks to sterling, especially if we look at the Brexit scenario,” said Soeren Hettler, a senior foreign-exchange analyst at DZ Bank in Frankfurt.

“The fundamental data is weaker than we saw earlier in the year but with this uncertainty on Brexit, this isn’t a surprise,” Mr Hettler said.

The pound fell 0.4% to $1.4477 in late trade in London, after reaching $1.4462, the lowest level since April 25.

Sterling weakened for a fourth day against Europe’s shared currency, losing 0.4% to 79.39p per euro. The UK currency may weaken to beyond 80p per euro before the June 23 referendum, Mr Hettler said.

UK government bonds were little changed, with the 10-year gilt yield at 1.53%.

The price of the 2% security due in September 2025 was at 104.08% of face value.

Construction output in Britain grew at its slowest rate in nearly three years in April, a survey showed yesterday, suggesting the economy was losing steam before next month’s referendum on whether to remain a member of the EU.

A Markit survey on Tuesday which showed Britain’s manufacturing industry shrank for the first time in three years.

While the rate of new home construction increased in April, growth in commercial property fell to its lowest since July 2013, Markit said.

“Softer growth forecasts for the UK economy alongside uncertainty ahead of the EU referendum appear to have provided reasons for clients to delay major spending decisions until the fog has lifted,” Tim Moore, senior economist at Markit, said.