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Forex - GBP/USD falls on downbeat U.K. PMI

Published 10/01/2014, 04:44 AM
Updated 10/01/2014, 04:44 AM
Pound loses ground vs. dollar as U.K. PMI disappoints

Pound loses ground vs. dollar as U.K. PMI disappoints

Investing.com - The pound fell against the U.S. dollar on Wednesday, weighed by data showing that manufacturing activity in the U.K. expanded at the slowest pace in 17 months in September.

GBP/USD hit 1.6162 during European morning trade, the pair's lowest since September 16; the pair subsequently consolidated at 1.6171, sliding 0.26%.

Cable was likely to find support at 1.6050, the low of September 10 and resistance at 1.6288, Tuesday's high.

Markit research group said that the U.K. manufacturing purchasing managers' index fell to 51.6 in September from a reading of 52.2 in August, whose figure was downwardly revised from a previously estimated reading of 52.5.

Analysts had expected the index to rise to 52.5.

Commenting on the report, Rob Dobson, senior economist at survey compiler Markit, said, “September’s disappointing reading will add to the air of caution as to whether the economy is ready for higher interest rates."

Meanwhile, demand for the dollar remained broadly supported by the view that the strengthening economic recovery in the U.S. would prompt the Federal Reserve to hike rates sooner.

Investors were looking ahead to Friday’s U.S. nonfarm payrolls report after August’s report fell short of expectations.

Sterling was steady, near two-year lows against the euro, with EUR/GBP dipping 0.05% to 0.7786.

In the euro zone, Markit said the bloc's manufacturing PMI fell to 50.3 last month from 50.5 in August, compared to expectations for the index to remain unchanged.

Germany's manufacturing PMI declined to 49.9 in September from 50.3 the previous month. Analysts had expected the index to remain unchanged last month.

The data fuelled further concerns over the outlook for growth in the euro area.

On Tuesday, data showed that the annual rate of euro zone inflation fell to a five year low of 0.3% in September, adding to pressure on the European Central Bank to implement additional stimulus measures to stave off the threat of deflation in the region.

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