LONDON: Sterling fell against the euro and was subdued against the dollar on Friday on growing evidence that Britain's economic growth is moderating, a factor that is likely to keep British interest rates lower for longer.
Construction output fell 2.2 percent in October after rising by the same amount in September, the Office for National Statistics said on Friday.
The euro was up 0.5 percent at 79.14 pence and on track for its first weekly gains in two weeks.
The euro was being supported against the dollar due to falling US yields and increased buying of euros versus central European currencies like the Polish zloty and the Hungarian forint.
Against the dollar, the pound was steady at $1.5735 , staying away from a 15-month trough of $1.5585 hit on Monday.
The latest data followed reports on Thursday that showed Britain's property market was cooling. British house prices grew at their slowest rate in a year and a half during the past three months, a property industry body said.
Traders are gearing up for consumer price inflation data due next Tuesday.
Annual inflation for November is forecast to decline to 1.2 percent from 1.3 percent a month earlier.
"Consumer price inflation in the UK remains close to five-year lows and another surprise fall as oil prices decline could mean a dovish-for-longer Bank of England, which is negative for the pound," said Nawaz Ali, currency analyst at Western Union.
On Thursday, the BoE proposed an overhaul of the policy rate-setting process, paving the way for sharper swings in the pound on days when rate decisions are announced.
New procedures would involve eight meetings per year instead of the current 12 with the policy decision, minutes and quarterly inflation reports to be published at the same time.
"The result of these changes will hopefully be more transparency on the BoE's policy stance, but it's also good news for day traders as it could add to volatility on the day of the release," said Jasper Lawler, an analyst at CMC.
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