The British economy unexpectedly shrank during January, piling pressure on Treasury chief Rachel Reeves before a key statement about the state of the public finances later this month.

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

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.