LONDON (Reuters) - Sterling held near its lowest level for more than two years on Wednesday as better-than-expected readings on the British economy did little to lift the gloom.
Growing fears of a no-deal Brexit under a new prime minister, and weak data in recent weeks, have raised fears that the Bank of England will have to reverse its relatively confident outlook on the British economy and join its global peers in starting to cut interest rates.
Britain's economy grew more than expected in May, helped by a rebound in car production after Brexit-related shutdowns.
Graphic: Trade-weighted sterling since Brexit vote http://tmsnrt.rs/2hwV9Hv
Overall output expanded 0.3% after contracting by 0.4% in April, stronger than all forecasts in a Reuters poll, which had pointed to a rise of 0.1%.
A spat between Britain and the United States following the leak of memos about the U.S. administration from the British ambassador also raised concerns.
Against the dollar <GBP=D3>, the pound edged 0.1% higher to $1.2478, still close to Tuesday's low of $1.2439, its lowest in more than two years, barring a flash crash earlier this year.
Against the euro <EURGBP=D3>, the pound was on track for a 10th consecutive week of losses, dropping 0.1% to 89.95 pence.
Graphic: World FX rates in 2019 http://tmsnrt.rs/2egbfVh
Markets are also now pricing in a BoE rate cut during the next 12 months, as central banks around the world adopt an easing bias in the face of economic uncertainty and trade tensions between the United States and China.
(Reporting by Saikat Chatterjee; Editing by Kevin Liffey)
