LONDON: Sterling edged down against the dollar on Tuesday after a survey showed construction activity in Britain expanded at its weakest pace in more than a year last month, another sign that the UK economy is slowing.
The monthly purchasing managers' index (PMI) for the sector dropped to 59.4 in November, short of economists' expectations of 61.0, but still well above the 50 level that separates growth from contraction.
Sterling dipped to $1.5701 after the data, from around $1.5716 before the survey's release. It was last trading at $1.5708, down 0.1 percent on the day.
The euro remained more or less unchanged at 79.18 pence , down 0.1 percent against the pound.
"One thing to remember about the construction PMI is that it's not really indicative of the UK economy as a whole and hence rate expectations, so one should not pay too much attention to it," said Manuel Oliveri, a currency strategist at Credit Agricole.
More important, Oliveri said, would be the equivalent survey from the services sector due on Wednesday morning. The services industry makes up almost 80 percent of the UK economy and its health is therefore an important consideration for the Bank of England when deciding when to raise interest rates.
UK interest rate forecasts have been pushed back dramatically over the past few months, with some now not expecting a hike until early 2016. That pushback of expectations has weighed on the pound, helping send it down almost 9 percent since it hit a six-year high near $1.72 in July.
Finance minister George Osborne will use his half-yearly budget update on Wednesday to try to convince voters that his plan for more spending cuts is more credible than Labour's less aggressive austerity proposals.
The argument continues to rage over the net effect of the cuts on UK growth going forward, crucial to efforts to reduce a high budget deficit and to the outlook for monetary policy.
"All eyes will be on the projections for the likes of GDP inflation and most notably the country's debt," wrote Alpari analyst James Hughes in a note.
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