Sterling hits seven-week low

Sterling hit a seven-week low on Friday against a dollar boosted by expectations of an imminent US interest rate hike, after more UK data, this time from the dominant services sector, suggested the economy could be running out of steam. A weaker-than-expected services Purchasing Managers' Index on Friday chimed with notes of caution from several top companies, suggesting the British economy's resilience since last June's Brexit vote may be starting to fade.
The data came a day after an equivalent survey for the construction sector showed activity picked up in February but that the pace of new orders slowed.
Worries about a fresh Scottish independence referendum have also helped spur six days of losses for the pound against the dollar, its longest losing streak since December 2015, when markets started taking the risk of a Brexit vote more seriously.
British Prime Minister Theresa May took aim at Scotland's ruling party on Friday, accusing it of sacrificing both the UK and Scotland in its "obsession" with securing independence.
The pound fell to a seven-week low of $1.2215 in early London trade, but had recovered to around $1.2245 by 1650 GMT, down 0.2 percent on the day.
"Sterling's been in the grip of politics ... and we're talking about the other side of the equation here, really, and that's the dollar," said Neil Mellor, currency strategist at Bank of New York Mellon.
The pound has fallen more than 2 percent against the greenback this week, with the US currency boosted by hawkish comments from a string of US Federal Reserve officials that have led to a dramatic revision of rate expectations. Investors are now pricing in a 70 percent chance of a March hike.
Speeches from Yellen and Fed Vice Chair Stanley Fischer later on Friday are widely expected to provide the final clues to the timing of the next rate hike.
Against a broadly stronger euro, sterling fell 0.6 percent to 86.15 pence, having traded at a four-week low of 86.40 pence earlier.
"The euro is benefiting against the pound from the reduction in political risk in Europe over the last week or so," said MUFG currency analyst Lee Hardman.
A poll on Friday for the first time put centrist Emmanuel Macron ahead of far-right leader Marine Le Pen in the opening round of the French presidential elections, as conservative Francois Fillon came under pressure to pull out of the contest.