Investing.com - The pound fell to seven-week lows against the dollar on Wednesday ahead of the UK government’s annual budget statement later in the day, as the country prepares to trigger its exit from the European Union.
GBP/USD was down 0.3% at 1.2159 at 10.23 GMT, the weakest level since January 17.
Sterling has lost almost 20% of its value against the dollar since the Brexit vote last June.
Chancellor Philip Hammond is due to deliver at 12.30 GMT the first full budget statement since the Brexit vote.
Analysts have said a key factor that could impact the strength of the pound would be the expected announcement of a so-called ‘Rainy Day Fund’, with Hammond setting aside fiscal firepower to protect the economy from the effects of Brexit.
Sterling came under pressure in the previous session after weak consumer spending data underlined concerns that the economy is faltering as it prepares to exit the EU.
Political developments also weighed on sterling, after Britain's upper house of parliament voted on Wednesday to give parliament a veto over the outcome of Prime Minister Theresa May’s Brexit negotiations.
Britain needs to trigger Article 50 to launch formal divorce negotiations with the EU, and expects to do by the end of this month.
Sterling was also at seven-week lows against the euro, with EUR/GBP up 0.23% at 0.8680.
Meanwhile, the U.S. dollar index, which measures the greenback’s strength against a trade-weighted basket of six major currencies, was at 101.91, holding above Monday’s one-week low of 101.22.
Investors were turning their attention to Friday’s U.S. jobs report, which could confirm expectations for an interest rate hike from the Federal Reserve next week.
Ahead of the government report, payroll processing firm ADP is set to release data on February private sector payrolls at 8:15AM ET (13:15GMT).
A rate increase at the Fed’s March 14-15 meeting is seen as a near certainty following recent hawkish comments by Fed policymakers, including Chair Janet Yellen.
Futures traders are pricing in around an 86% chance of a hike at next week’s meeting, according to Investing.com’s Fed Rate Monitor Tool.