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Forex News: Pound Extends Decline As U.K. Manufacturing PMI Hits

Pound Extends Decline As U.K. Manufacturing PMI Hits 25-Month Low

09/03/2018 - 05:33:00 (RTTNews)

(RTTNews) - The pound extended its early decline against its major counterparts in early European deals on Monday, as a data showed that the UK manufacturing sector expanded at the weakest pace in just over two years in August.

Survey data from IHS Markit and Chartered Institute of Procurement & Supply showed that the manufacturing Purchasing Managers' Index dropped to 52.8 in August from 53.8 in July. However, any reading above 50 indicates growth in the sector.

This slowdown was driven by a contraction in new export orders for the first time since April 2016.

The currency has been already weighed by comments from U.K. Prime Minister Theresa May, who ruled out a second Brexit vote.

May remarked that a second referendum would be a "gross betrayal" of democracy as millions voted to leave the EU in the referendum held in June 2016.

European shares fell as a slew of factors such as Brexit uncertainty, renewed trade tensions and the recent rout in emerging market currencies kept the underlying mood cautious.

The pound slipped to a 5-day low of 1.2884 against the greenback, compared to 1.2951 hit late New York Friday. The pound is poised to find support around the 1.27 level.

The U.K. currency that ended last week's deals at 143.84 against the yen dropped to a 5-day low of 143.02. If the pound falls further, it may find support around the 141.00 level.

Final survey figures from IHS Markit showed that Japan's manufacturing growth improved slightly in August.

The Nikkei flash manufacturing Purchasing Managers' Index, or PMI rose to 52.5 in August from 52.3 in July.

The pound slid to a 5-day low of 0.9012 against the euro from Friday's closing value of 0.8952. On the downside, 0.91 is likely seen as the next support level for the pound.

Survey data from IHS Markit showed that Eurozone manufacturing activity continued to strengthen in August, maintaining the run of expansion that stretched to 62 months.

The Purchasing Managers' Index fell to 54.6 in August, in line with flash estimate, from July's 55.1. The indicator pointed to the slowest growth since November 2016.

The pound dropped to 1.2501 against the franc, its lowest since September 2017. The pound is likely to challenge support around the 1.22 level.

The U.S. markets remain closed on account of the Labor Day holiday.

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