Forex News – Sterling drops after UK manufacturing PMI posted below forecast growth

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Sterling fell against the dollar and euro after the UK purchasing managers’ index (PMI) on manufacturing activity came in well below forecasts. The economic slowdown in the euro zone also affected demand for goods made in the UK,  raising the risk of a longer recession.

Manufacturing PMI compiled by Markit/CIPS dropped to 50.5 in April from a downwardly revised 51.9 in March. This is the lowest level since December and short of forecasts for a dip to 51.5. Though this kept the sector just above the 50 level which separates growth from contraction.

Sterling fell around 0.2 percent on the day against the dollar to hit a low of $1.6190, compared with around $1.6211 just before the data.

The euro rose to 81.96 pence, its strongest in nearly a week, trading with a gain of around 0.5 percent on the day to leave it in sight of the April 25 high of 82.20 pence. Before the data the euro was trading around 81.80 pence.