UK GDP takes a hit.

Britain's economy grew at the slowest rate in five years over the first quarter, official figures indicated Friday, sending the pound sharply lower as investors re-set expectations for rate hikes from the Bank of England.

U.K. GDP was tabbed at 0.1% over the first three months of the year, the Office for National Statistics said, the slowest advance since the fourth quarter of 2012 and well shy of the consensus forecast of 0.3%. A slump in construction spending, linked to Britain's "Beast from the East" cold snap, which brought record low temperatures and unprecedented snow to much of the country last month, was the largest downside contributor to the reoprt.

"Our initial estimate shows the UK economy growing at its slowest pace in more than five years, with weaker manufacturing growth, subdued consumer-facing industries and construction output falling significantly," said Rob Kent-Smith of the ONS. "While the snow had some impact on the economy, particularly in construction and some areas of retail, its overall effect was limited with the bad weather actually boosting energy supply and online sales."

The pound fell sharply against the U.S. dollar immediately following the release, tumbling more than 1% to 1.3768, the lowest since March 9, as investors extended bets that the Bank of England won't be able to raise its key interest rate when it meets next month in central London.

"For the Bank of England, weaker economic growth certainly throws a spanner in the works," said Tej Parikh, senior economist at the Institute of Directors lobby group. "An interest rate rise next month has long been on the cards but today's data, alongside the need for clearer evidence of growing wage pressures, calls that into question."

"The Bank will need to be certain that the drop in economic growth in Q1 was only temporary," Parikh added.