Sterling slips after weak industrial output data

Meanwhile, overall industrial production - a broader gauge of the industry - fell 0.7% in February compared with analysts' expectations for growth to increase to 0.2%.

Analysts had been pencilling in a more modest decline of 0.2 percent for February.

A surprisingly large goods trade deficit - albeit distorted by imports of high-value goods like gold and aircraft - and a slump in construction added to evidence that Britain's economic growth rate peaked towards the end of past year.

Looking ahead, economists expect Brexit-fuelled uncertainties and rising inflation caused by a weak pound and rising oil prices to crimp growth, which was 1.8 percent in 2016.

Underlining the caution among households, mortgage lender Halifax reported the weakest house price growth in almost four years and a survey of recruiters showed staff were nervous about switching jobs ahead of Brexit.

Figures from the Office for National Statistics (ONS) showed construction output came in shy of expectations, falling by 1.7% in February, down from a revised reading of 0% in January.

"Today's deluge of United Kingdom economic data was fairly disappointing and adds to the evidence that the economy has lost some momentum during Q1", said Ruth Gregory, economist at Capital Economics.

Including goods and services, the trade gap widened to GBP 3.66 billion from GBP 2.97 billion in January.

The fall in all new work was driven by the first month-on-month drop in infrastructure since October 2016, which decreased by 7.3 per cent, and housing, which fell for the second consecutive month by 2.6 per cent.

Construction output grew for the fourth three-month period on the bounce, increasing by 1.5%, while manufacturing increased by 2.1%.

As accelerating inflation squeezes consumer spending-for years a key engine of United Kingdom growth-economists say that production and trade will have to make a bigger contribution to stave off an economic slowdown.

  • Zachary Reyes