Business World

Saturday 24 March 2018

Sterling falls on poor manufacturing data

Sterling notes
Sterling notes

Neal Armstrong

The pound weakened the most in a month versus the euro as a measure of whether UK economic data has been beating analysts' expectations dropped to the lowest level in three weeks, damping investor demand for the currency.

Sterling dropped versus all but one of its 16 major peers after reports last week showed UK factory output unexpectedly stagnated in November and a gauge of services activity slowed.

Britain's currency declined for the first time in four days against the dollar as oil-engineering company Amec agreed to buy US-traded Foster Wheeler for $3.2bn (€2.3bn). UK government bonds advanced, with 10-year yields falling to the lowest in five weeks.

"Our UK data surprise index has been turning over quite sharply," said Chris Walker, a foreign-exchange strategist at Barclays in London.

"There tends to be a reasonably strong correlation between the currency and the index.

"We remain positive on sterling, but there are risks," Mr Walker said.

The pound weakened 0.6pc to 83.44 pence per euro yesterday afternoon, the biggest decline since December 11.

It appreciated to 82.31 pence on January 9, the strongest since January 2013. Citigroup's UK economic surprise index slid to 4.60 on January. 10, the lowest since December 23.

Irish Independent

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