Forex Pros – The pound erased early gains against the U.S. dollar on Wednesday, falling to a three-day low after official data showed that manufacturing activity in the U.K. grew at its slowest rate in 20 months in May.
GBP/USD retreated from 1.6495, the daily high to hit 1.6415 during European early afternoon trade, shedding 0.19%.
Cable was likely to find support at 1.6377, the low of May 27 and resistance at 1.6546, Tuesday’s high and a four-week high.
The Markit/CIPS manufacturing purchasing managers’ index fell to 52.1 last month from a downwardly revised 54.4 in April, well below the 54.1 forecast decline.
The worst reading since September 2009 was blamed on a weaker domestic market, particularly for consumer goods, and the slowest growth in export orders in eight months. Extra public holidays also reduced activity.
Separately, the Bank of England said that U.K. mortgage approvals unexpectedly fell to their lowest level since December last month.
The data reinforced expectations that the BoE is unlikely to raise interest rates for some time to come.
The pound was also lower against the euro, with EUR/GBP rising 0.16% to hit 0.8765.
Later Wednesday, U.S. payroll processing firm ADP was to publish its report on non-farm payrolls. Elsewhere, the U.S. Institute of Supply Management was to publish data on manufacturing activity.
ForexPros.com
