Sterling weakened against all 16 of its most widely traded peers, adding to declines yesterday, when Fitch Ratings said Britain is taking too long to cut its budget deficit. Concern that U.K. elections this year may give the nation its first minority government since 1974 has helped drive down sterling by 7.8 percent against the dollar since Dec. 31. Ten-year gilts fell, paring yesterday’s gains.

“Sterling remains weak amid ongoing concerns over debt ratings and political dynamics,”

said Jeremy Stretch, senior currency strategist at Rabobank International in London.

The pound fell 0.6 percent to $1.4912 as of 9:44 a.m. in London. Sterling tumbled to $1.4784 last week, the lowest since May 1 2009. The U.K. currency depreciated 0.5 percent to 91.15 pence per euro.

Data from the Office for National Statistics showed manufacturing output contracted 0.9 percent in January for the first time in five months. Economists had predicted a 0.2 percent increase, according to the median of 26 forecasts in a Bloomberg survey. Overall industrial production fell 0.4 percent for the month, compared with economists’ prediction for an 0.3 percent gain.

“The production data this morning may have been impacted by the bad weather in January, and this may play into the broader sterling negativity,” Stretch said.

The pound is the worst performer this year among the U.S. currency’s 16 most-traded counterparts.

The 10-year gilt yield gained 2 basis points to 4.06 percent. The 3.75 percent security due September 2019 fell 0.11, or 1.1 pounds per 1,000-pound face amount, to 97.58. The two- year yield was little changed at 1.24 percent.

Prime Minister Gordon Brown said today this year’s U.K. budget statement will be delivered on March 24.