LONDON: Sterling fell towards $1.29 on Monday as traders trimmed their positions before the release of a batch of economic data following signs the British economy is slowing down in the face of Brexit uncertainty.
Manufacturing output for December, as well as GDP data for the last three months of 2018, will be released at 0930 GMT. Analysts polled by Reuters are expecting quarter-on-quarter economic growth of 0.2 percent against 0.6 percent for the previous quarter.
Sterling last week suffered its worst weekly decline in a month, with a stalemate over Brexit weighing on the currency and leading the Bank of England to cut its UK growth forecast.
Data in the last two weeks has also suggested a slowing British economy as businesses and consumers grow increasingly nervous in the face of uncertainty about Britain's departure from the European Union.
The pound fell 0.1 percent to $1.2933 after slipping to $1.2908.
Against the euro sterling dropped 0.2 percent to 87.58 pence per euro.
Craig Erlam, market analyst at Oanda, said the GDP data was "expected to show the economy flatlined in December but grew slightly across the whole quarter. In a week in which Germany could follow Italy into technical recession, this suddenly doesn't seem quite so bad."
Brexit negotiations continue to hang over sterling and will likely dominate trading in the coming sessions.
Prime Minister Theresa May has rejected the idea of targeting a customs union with the EU and fears are growing that the British leader is playing a game of brinkmanship as she tries to secure backing for her withdrawal agreement ahead of the scheduled Brexit departure date of March 29.
Commerzbank analysts said that without an end to the uncertainty the pound would likely trade lower.
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