Britain's beleaguered pound inched up against the dollar and euro in thin trade on Monday, but stayed within 2 cents of the 31-year low it hit a week ago after Britain's vote to leave the European Union. Sterling has been the main way financial markets have expressed worries over the economic impact of the vote for "Brexit", recording its steepest one-day decline in modern history on the day the results came through and falling almost 12 percent in just two days.
With US markets closed for Independence Day, trade was thin, and sterling stayed within a 1-cent range.
Earlier, it was knocked by data that showed Britain's construction sector PMI survey suffered its worst contraction in seven years in the run up to the EU vote, which added to expectations, stoked by Governor Mark Carney last week, that the Bank of England (BoE) will have to cut interest rates in the months ahead to counter the economic fallout of the vote.
Sterling inched up 0.2 percent to $1.33, less than 2 cents away from last week's low of $1.3122. Against the euro, it edged up 0.1 percent to 83.81 pence, having earlier touched a 2-1/2-year low.
Investors say they have drawn some reassurance from the fact that British politicians have not been rushing to trigger Article 50, the mechanism for a state to leave the EU, despite European leaders telling Britain to act quickly.
"We're in a bit of a phony-war period - we've had the vote but now we're just treading water until we get the next step, which might be Article 50 being signed, or something else happening," said HSBC currency strategist Dominic Bunning.
Against the Bank of England's trade-weighted basket of currencies, sterling traded at 79.7, equalling a three-year trough hit on Friday.
While June's PMI surveys of sentiment among company purchasing managers carry less weight given they refer chiefly to the period before the Brexit vote, some banks wonder if Tuesday's print for the dominant services sector of the economy will already show some direct fallout.
"The survey period covers three working days after the EU referendum. If many companies filed returns after the vote, we could see a soft print," BNP Paribas currency strategists said in a morning note to clients.
That would argue for more easing than the quarter-point reduction in interest rates by the BoE which money markets are pricing in for August. The bank publishes its regular financial stability report on Tuesday.
The pound suffered at the end of last week from Carney's guidance that the bank was likely to ease policy over the summer to counter the economic shock of Britain's June 23 vote.
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