The Great Britain weakened against the U.S dollar on Monday after after data showed that the U.K. manufacturing sector expanded at a slower than expected rate last month, adding to concerns that the economy is losing momentum.
The Markit U.K. manufacturing purchasing managers’ index ticked up to 52.0 in May from a downward revised 51.8 in April, but came in below forecasts of 52.5.
“Expectations of a broad rebound in UK economic growth during the second quarter of the year are called into question by these readings,” Markit senior economist Rob Dobson said.
“Manufacturing looks on course to act as a minor drag on the economy, as the sector is hit by the combination of the strong pound and weak business investment.”
The report came after official figures last week confirmed that the U.K. economy grew just 0.3% in the first quarter, fueling concerns that the rate of the economic recovery is moderating.
Recent soft economic data has underlined expectations that the Bank of England will leave interest rates on hold for longer.
Sterling also remained under pressure amid renewed concerns over a possible British exit from the European Union.
Prime Minister David Cameron’s government introduced a law in parliament on Thursday to ensure a U.K. referendum on EU membership will be held by the end of 2017.
Meanwhile, the U.S dollar gained strength following the release of upbeat U.S. economic reports on manufacturing activity and construction spending. The dollar was boosted after the Institute of Supply Management’s manufacturing index accelerated in May, as new orders and employment both rebounded.
The ISM index of manufacturing activity was 52.8, up from 51.5 in April and ahead of forecasts for 52.0.
The employment index rose from 48.3 in April to 51.7 in March, while new orders were up from 53.5 to 55.8.
Another report showed that U.S. construction spending rose to the highest level in six-and-a-half years in April, adding to recent signs that the economy is rebounding from a weak first quarter.
The Commerce Department said construction spending jumped 2.2% to an annual rate of $1.0 trillion, the highest since November 2008.
Intraday bias remains bearish as 21 crosses 55 EMA downward. MACD and SSRC oscillator are also showing signs of bearish continuation in the pair. With 1.5235 support being taken out and also price still trading below this support, am expecting further decline to 1.5068 if price breaches 1.5169 support.