Data suggesting the British economy kept its momentum at the end of 2016 was overshadowed today by uncertainty over whether Britain will undergo a "hard Brexit" from the EU.

This sent sterling to an 11-week low against the dollar. 

The UK's industrial output rose 2.1% in November, recovering from a 1.1% drop in October and beating expectations for a 0.8% jump. 

But after initially inching higher on the data, the pound quickly gave up those gains as Brexit dominated.

The pound briefly dipped below $1.21 for the first time since October 25, before recovering to $1.2130, leaving it down 0.4% on the day.

Sterling had posted its worst day in three months on Monday after Prime Minister Theresa May said she was not interested in keeping "bits" of its European Union membership. 

That sparked expectations Britain was heading for a hard Brexit, in which access to the single market plays second fiddle to immigration controls. 

Analysts said the impact of such an outcome remained the key driver for sterling today.

Sterling has fallen around 19% against the dollar since the UK voted on June 23 to leave the EU, and around 12% against the euro, which has itself been vulnerable to political uncertainty.