A strong final reading of the UK services PMI for January briefly injected some strength into sterling today.

But the currency was close to the six-week low it hit this week after Britain took a hard line on trade talks with the European Union. 

Concerns that Britain's fiscal expansion may not be as generous as previously expected also weighed on the pound, analysts said. 

The purchasing managers' index for the services industry - the biggest contributor to Britain's GDP - was revised to 53.9 for January, up from 52.9, where economists had expected it to stay. 

It was the strongest reading since September 2018. 

Sterling rose by as much as 0.3% in early trade, before falling 0.2% to $1.301, not very far from the low of $1.2942 it hit earlier this week after Prime Minister Boris Johnson said Britain would not adhere to EU rules and regulations. 

It then rebounded on the back of a better-than-expected construction survey.

Against the euro, sterling also rose by 0.2% at 84.6 pence.

The PMI data "reinforced the justification for the Bank of England holding off" from cutting interest rates last week, said Derek Halpenny, head of research at MUFG.

British Chancellor Sajid Javid is expected to present the new budget of the recently formed government on March 11, but tensions between Javid and Johnson's allies are rising as Javid threatens imposing serious spending constraints on the government. 

Dominic Cummings, chief special adviser to Johnson, is pushing through a number of big spending commitments in areas such as health and police - promises which helped the Conservative Party to win the December general election.