LONDON, July 7 (Reuters) - Sterling slipped to the day's lows against the dollar on Friday after industrial output data for May unexpectedly contracted, posing fresh challenges for the UK economy.
Sterling fell 0.4 percent to $1.2916 after data showed industrial production for May contracted by 0.1 percent on a monthly basis, compared with a forecast 0.4 percent expansion.
The currency also hit a nine-day low of 88.35 pence per euro after the data, down 0.3 percent on day.
Britain's blue chip FTSE 100 index pared losses after sterling weakened to trade just 0.1 percent lower while gilt futures edged higher after the data. (Reporting by London Markets Team, editing by Nigel Stephenson)