Sterling set for first fall in four weeks, eyes on output data

By John Geddie

LONDON (Reuters) - Sterling was set for its first week of falls in four on Friday as investors awaited data crucial to Britain's growth outlook as it begins the process of leaving the European Union.

In the first full week of trading since UK Prime Minister Theresa May formally began Britain's divorce from the EU, the pound has slipped 0.7 percent against the dollar.

It was down 0.1 percent on Friday at $1.2455. In the three previous weeks it had gained around 3 percent against a broadly weaker dollar, as investors weighed up whether the Bank of England might consider a rate rise to rein in inflation.

Moves on Friday were muted before a raft of economic data due at 0830 GMT, including industrial production and construction readings.

Economists polled by Reuters expect construction volumes to have grown 1.9 percent year-on-year in February, and industrial output to have risen 3.7 percent year-on-year in February.

"These February data releases will be the last hard inputs into Q1 GDP before the preliminary estimate on 28 April," RBC's global head of FX strategy, Elsa Lignos, said in a note.

"Although January outturns disappointed, the handover from Q4 was strong, so even stable levels of activity in February and March versus January would see both IP and construction make positive contributions to Q1 GDP growth."

(Editing by Andrew Roche)