Sterling drops after UK economy contracts by more than expected

LONDON (Reuters) – The British pound declined against the dollar and euro on Wednesday after data showed British economic output contracted by more than expected in July.

Sterling was last down 0.3% against the dollar at $1.2459, on track for its biggest daily drop in a week.

The euro rose 0.1% against the pound to 86.24 pence, its highest level in a month.

The UK economy contracted by 0.5% in July, the Office for National Statistics said, worse than expected contraction of 0.2% and the largest drop in monthly output since Dec. 2022.

(Reporting by Samuel Indyk; Editing by Amanda Cooper)