LONDON (Reuters) - Sterling fell on Monday as Prime Minister Theresa May’s top lawyer tried to clinch a Brexit compromise with the European Union in a last-ditch bid to win over rebellious British lawmakers.
The pound had gained earlier in the session on signs some pro-Brexit lawmakers were willing to compromise with May, increasing the chances she will get her Brexit deal through parliament next week.
“Despite a strong start for the pound, dismal construction sector data and a strengthening dollar saw sterling drop below $1.32,” said City Index senior market analyst Fiona Cincotta.
Britain’s construction industry reported the first fall in activity in almost a year last month, with the HIS Markit/CIPS Purchasing Managers’ Index (PMI) falling to 49.5 in February from January’s reading of 50.6, although the pound was unmoved after the release.
Media reports over the weekend suggested London was softening its demands of the European Union in renegotiating parts of the Brexit withdrawal deal that is deeply unpopular within large parts of May’s own Conservative party.
The Sunday Times said a group of Brexit-supporting lawmakers who previously rejected May’s deal have set out changes they want to see to her agreement in return for her support.
The British parliament is set to vote on May’s deal next week, although the vote could be held sooner. If it fails to pass, lawmakers will get to vote on whether to delay Brexit, currently set for March 29.
Hopes for a delay to Brexit and bets that a no-deal Brexit is a far less likely outcome sent sterling surging last week as high as $1.3351. The British currency is up 3.7 percent against the dollar so far in 2019 and 4.7 percent versus the euro.
On Monday, though, sterling fell 0.3 percent to $1.3167, its lowest since Feb 26. It traded broadly flat against a weaker euro at 85.92 pence.
While Brexit negotiations dominate the headlines, concerns about a slowdown in the British economy continue to build.
The PMI for Britain’s dominant services sector is published on Tuesday.
Reporting by Tommy Wilkes and Tom Finn; editing by Louise Heavens, and Andrew Cawthorne