Britain's construction sector came close to contracting for the first time since September last month as uncertainty linked to Brexit caused new orders to dry up, data showed.

Sterling slipped to the day's low of $1.4210 after the data, down around a third of a percent on the day. It was also 0.2 percent weaker against the euro, at 87.82 pence .

"The PMI construction data today certainly could have had an impact, and certainly sterling is a bit softer, but I'm wondering if there could be a reassessment going on in sterling," Rabobank currency strategist Jane Foley said.

For the week, sterling was still up almost half a percent against the dollar. Analysts say the currency is being supported by a repricing of Bank of England interest rate hike expectations - several banks are now calling for a rise to come in May, and for another to come later in the year.

That follows testimony on Tuesday from BoE Governor Mark Carney, who sounded a more upbeat tone than previously, saying how wage growth was finally picking up and that the focus of the BoE is shifting back to tackling above-target inflation.

"There does seem to be a will in the Bank of England to reduce policy accommodation. If it weren't for the Brexit-related risks, I would be very confident that they will (hike) twice this year," Foley added.

The BoE's Monetary Policy Committee is seen as almost certain to keep rates at 0.50 percent when it meets next week, however.

Sterling has also been helped in recent weeks by a lack of major bad news around Brexit, analysts say. Markets largely brushed aside talk of a leadership challenge to British Prime Minister Theresa May, as well as a House of Lords report that said her Brexit legislation plans contained "fundamental flaws".

Data last week showed speculators added to their bets on the pound strengthening further in the most recent week, with net-long positions at their highest since mid-2014.

"While the front-end BoE rates market has sold off plenty and sterling has moved significantly higher (against the dollar), we think both moves have further to go," wrote Nomura currency strategist Jordan Rochester in a note to clients late on Thursday.