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Forex News: Pound Drops As U.K. Private Sector Growth Slows

Pound Drops As U.K. Private Sector Growth Slows To 15-month Low

05/24/2022 - 08:00:00 (RTTNews)

(RTTNews) - The pound declined against its major counterparts in the European session on Tuesday, as the nation's private sector growth slumped to its weakest level since March 2021 as high inflation and heightened geopolitical uncertainty dampened customer demand in May.

Survey results from S&P Global and Chartered Institute of Procurement & Supply showed that the flash composite output index fell to a 15-month low of 51.8 in May from 58.2 in April. Economists had expected a score of 56.5.

The services purchasing managers' index dropped to a 15-month low of 51.8 in May from 58.9 in April. The score was forecast to rise to 57.

The manufacturing PMI fell to a 16-month low of 54.6 in May from 55.8 in April. Economists had expected the reading to drop to 55.

European shares fell as a profit warning from Snapchat owner Snap Inc. triggered fears about inflation and tightening hurting corporate profits.

The social media company projected that revenue and adjusted EBITDA would be below the low end of guidance reflecting a deteriorating macroeconomic environment.

The pound edged down to 1.2475 against the greenback, after rising to 1.2599 at 3:30 am ET. The next likely support for the pound is seen around the 1.22 level.

The pound touched 0.8585 against the euro, its lowest level since May 12. On the downside, 0.88 is possibly seen as its next support level.

The U.K. currency depreciated to a 4-day low of 158.74 against the yen and more than a 1-year low of 1.2013 against the franc, down from its prior highs of 160.99 and 1.2156, respectively. The pound is likely to find support around 153.00 against the yen and 1.18 against the franc.

Looking ahead, U.S. new home sales and Canada manufacturing and wholesale sales for April will be featured in the New York session.

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