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Sterling falls on weak data, election jitters
 

* Sterling falls below $1.60 vs dollar; euro above 90 pence

* Jitters as UK election campaign gets under way

* Weak UK data, Cadbury rejection of new Kraft bid weigh

LONDON, Jan 5 (Reuters) - Sterling fell sharply across the board on Tuesday on worries about a flagging UK economy and high debt levels, coupled with jitters as an election campaign got under way.

Data showing British construction activity contracted for a 22nd consecutive month helped push sterling below $1.60 against the dollar and the euro above 90 pence, as it added to the view the UK recovery is lagging that of other major economies. [ID:nLDE6040N5]

Meanwhile, investors already fretting about how the UK will tackle its ballooning fiscal deficit became increasingly nervous about an upcoming general election, which has to be held before June, as campaigning began.

They are particularly mindful of the risks of a hung parliament, where no one party commands an overall majority. Analysts say such an outcome could mean any government would struggle to enact the fiscal measures necessary to cut UK debt.

"Sterling did sell off after the construction data, but it's largely the political backdrop that is the focus at the moment," said Christian Lawrence, FX strategist at RBC Capital Markets.

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Article Reference: http://www.ft.com/cms/s/0/f73a56ea-f6dd-11de-9fb5-00144feab49a.html?nclick_check=1

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