Investing.com - The pound fell sharply against the dollar on Friday, dropping to one-week lows after data showing that growth in the U.K. manufacturing sector slowed sharply in March.
GBP/USD was at 1.5137 late Friday, down 1.39% on the day.
Sterling sold off after research group Markit said its manufacturing purchasing managers’ index fell to a seven-month low of 51.9 in April, from 54.6 in March. Economists had forecast an increase to 52.0.
Output, new orders and employment all slowed the report said, with job creation in the sector the slowest in almost two years.
The report came after data earlier in the week showed that Britain’s economy grew just 0.3% in the first quarter of this year, half the rate of the previous quarter.
In the U.S., data released on Friday indicated that the economy may be stabilizing after a recent soft patch.
The Institute for Supply Management reported that activity in the manufacturing sector was stable in April, after slowing in the five previous months.
The ISM manufacturing PMI came in at 51.5 in April, matching the March reading, which had been the lowest since May 2013.
Another report showed that U.S. consumer sentiment rose in April to its highest level since January.
Separately, the Commerce Department said construction spending fell 0.6% to an annual rate of $966.6 billion in March, the lowest level since September.
The reports, while mixed, fuelled optimism that the U.S. economy has turned a corner after a recent bout of weakness.
The dollar had received a boost after a report on Thursday showed that the number of Americans filing new claims for jobless benefits fell to a 15-year low of 262,000, pointing to healthy growth in the labor market.
The U.S. dollar index, which measures the greenback’s strength against a trade-weighted basket of six major currencies, was last up 0.53% to 95.38 late Friday, after falling to two-month lows of 94.47 on Thursday.
Data earlier in the week showed that the U.S. economy grew just 0.2% in the three months to March, slowing from 2.2% in the final quarter of 2014. It was the slowest rate of growth in a year.
The weaker-than-expected data prompted investors to push back expectations on the timing of an initial rate hike by the Federal Reserve to later this year from midyear.
In its rate statement on Wednesday the Federal Reserve said recent indications of a slowdown in growth were probably due to “transitory factors.”
In the week ahead, investors will be focusing on Friday’s U.S. nonfarm payrolls report, for a fresh indication on the strength of the economic recovery. Investors will also be watching the outcome of Thursday’s U.K. general election, which could result in a hung parliament and an unstable coalition government.
Ahead of the coming week, Investing.com has compiled a list of these and other significant events likely to affect the markets.
Monday, May 4
Markets in the U.K. are to remain closed for holidays.
The U.S. is to publish figures on factory orders.
Tuesday, May 5
The U.K. is to release survey data on construction sector activity.
The U.S. is to release trade data, while the Institute of Supply Management is to release a report on service sector activity.
Wednesday, May 6
The U.K. is to release survey data on service sector activity.
The U.S. is to release its monthly ADP nonfarm payrolls report and Later in the day Fed Chair Janet Yellen is to speak at an event in Washington DC.
Thursday, May 7
The U.K. is to hold general elections.
The U.S. is to publish the weekly report on initial jobless claims.
Friday, May 8
The U.S. is to round up the week with what will be a closely watched government nonfarm payrolls report.