Investing.com – The pound extended losses against the U.S. dollar on Tuesday, falling to a four-day low after data showing a larger-than-expected contraction in U.K. manufacturing activity added to concerns over the outlook for the economy, despite stronger-than-expected third quarter growth.
GBP/USD hit 1.5900 during European early afternoon trade, the pair’s lowest since October 26; the pair subsequently consolidated at 1.5930, tumbling 0.97%.
Cable was likely to find short-term support at 1.5890, the low of October 26 and resistance at 1.6092, the days high.
The pound weakened broadly after a report showed that manufacturing activity in the U.K. fell to a 28-month low in October.
The U.K. manufacturing purchasing managers' index fell to a seasonally adjusted 47.4 in October, down from a reading of 50.8 in September, whose figure was revised down from 51.1.
Analysts had expected the index to decline to 50.0 in October.
The report overshadowed data from the Office for National Statistics showing that gross domestic product increased by 0.5% in the third quarter, up from the 0.1% rate of growth in the preceding quarter and surpassing expectations for a 0.4% gain.
Risk appetite was also hit following Greek Prime Minister George Papandreou's decision to hold a surprise referendum on Greece's bailout program.
If Greece rejects the deal it could move the country closer to a sovereign default, increasing the risk of contagion in global financial markets.
Meanwhile, the pound was up against the euro, with EUR/GBP shedding 0.27% to hit 0.8590.
Later Tuesday, the Institute of Supply Management was to produce a report on U.S. manufacturing activity.
GBP/USD hit 1.5900 during European early afternoon trade, the pair’s lowest since October 26; the pair subsequently consolidated at 1.5930, tumbling 0.97%.
Cable was likely to find short-term support at 1.5890, the low of October 26 and resistance at 1.6092, the days high.
The pound weakened broadly after a report showed that manufacturing activity in the U.K. fell to a 28-month low in October.
The U.K. manufacturing purchasing managers' index fell to a seasonally adjusted 47.4 in October, down from a reading of 50.8 in September, whose figure was revised down from 51.1.
Analysts had expected the index to decline to 50.0 in October.
The report overshadowed data from the Office for National Statistics showing that gross domestic product increased by 0.5% in the third quarter, up from the 0.1% rate of growth in the preceding quarter and surpassing expectations for a 0.4% gain.
Risk appetite was also hit following Greek Prime Minister George Papandreou's decision to hold a surprise referendum on Greece's bailout program.
If Greece rejects the deal it could move the country closer to a sovereign default, increasing the risk of contagion in global financial markets.
Meanwhile, the pound was up against the euro, with EUR/GBP shedding 0.27% to hit 0.8590.
Later Tuesday, the Institute of Supply Management was to produce a report on U.S. manufacturing activity.