Pound Falls On Downbeat PMI Data

(RTTNews) - The British pound weakened against other major currencies in the European session on Monday, following the release of U.K. preliminary PMI data showing that the nation's economic activity remains weaker than expected in July.

The flash Chartered Institute of Procurement & Supply composite output index dropped to a six-month low of 50.7 in July from 52.8 in June. The expected score was 53.0.

The Service Purchasing Managers' Index, or PMI, also fell to a six-month low of 51.5 in July from 53.7 in the previous month. The reading was expected to fall marginally to 55.5.

At the same time, the manufacturing sector continued to remain in the contraction zone with the corresponding PMI declining to a 38-month low of 45.0 from 46.5 in June. The expected score was 46.1.

The European stocks also dropped, with weak Eurozone business activity data and an inconclusive election result in Spain keeping investors nervous.

In the European trading today, the pound fell to a 2-week low of 1.2808 against the U.S. dollar, from an early high of 1.2884. The next support level for the pound is seen around the 1.25 region.

Against the Swiss franc and the yen, the pound dropped to 1.1101 and 181.01 from early highs of 1.1158 and 182.34, respectively. If the pound extends its downtrend, it is likely to find support around 1.09 against the franc and 174.00 against the yen.

Moving away from an early 5-day high of 0.8619 against the euro, the pound edged down to 0.8646. On the downside, 0.88 is seen as the next support level for the pound.

Looking ahead, Canada preliminary wholesale sales data for June and U.S. PMI reports for July are slated for release in the New York session.