Sterling lost some ground versus the dollar on Friday after data painted a grim picture of the British economy, and it softened against the euro as prospects of a German debt deal lifted the shared European currency.

The U.K.'s economy unexpectedly shrank by 0.1% month-on-month in January, official figures showed on Friday. Britain's Office for National Statistics said the fall was mainly due to a contraction in the production sector. Economists polled by Reuters had expected the country's GDP to grow by 0.1%.

Britain's economy unexpectedly shrank in January, official data showed Friday, piling more pressure on the Labour government ahead of its Spring Statement on the economy.

The slowdown in January piles further pressure on Rachel Reeves and Sir Keir Starmer ahead off this month’s spring statement