Investing.com - The pound slid to the day’s lows against the dollar on Wednesday after data showing that growth in the U.K. construction sector slowed to 10-month lows in February, on a drop in housebuilding.
GBP/USD eased to 1.3932 from around 1.3945 ahead of the data.
The Markit construction purchasing managers' index fell to 54.2 from January’s 55.0. Economists had expected the index to tick up to 55.5.
It was the slowest increase in overall construction output since April 2015.
Housebuilding expanded at the slowest pace since June 2013 and construction firms hired staff at the weakest rate in two-and-a-half years.
The report came a day after a similar survey of the manufacturing sector, which showed that activity slumped to the lowest in almost three years in February.
"Aside from the pre-election slowdown last year, the latest upturn in construction output was the weakest for over-two-and-a-half years," Tim Moore, senior economist from survey compiler Markit, said.
"What's different this time around is that construction companies have cut back on employment growth in response to the uncertain business outlook," Moore said.
The weak data added to the view that the Bank of England will keep interest rates on hold at record lows for longer.
Sterling also slid against the euro, with EUR/GBP at 0.7793, up from 0.7706 earlier.
The euro’s gains were held in check after weak euro zone inflation and factory data earlier in the week cemented expectations for more easing by the European Central Bank at its upcoming meeting on March 10.
The U.S. dollar index, which measures the greenback’s strength against a trade-weighted basket of six major currencies, was close to one-month highs at 98.48.
In the U.S., data on Tuesday showed that the Institute for Supply Management's manufacturing index rose more than expected last month.
In addition, U.S. construction spending rose to the highest level since October 2007, in January, indicating that the economy is regaining momentum after slowing in the fourth quarter.
The reports underlined expectations that the Federal Reserve will hike interest rates again this year.