The pound lost ground against its major rivals in European deals on Friday, as European stocks declined after disappointing factory data from China and as Greece faces snap elections by next month.
China’s vast manufacturing sector continued to struggle in August as the contraction accelerated, a preliminary survey from Caixin showed with a Performance of Manufacturing Index score of 47.1, down from 47.8 in July and representing a 77-month low. New orders decreased at a faster rate, as did new export orders, employment, output prices, stocks of purchases and quantity of purchases.
Investors were concerned about the political situation in Greece, after the Prime Minister Alexis Tsipras tendered his resignation on Thursday, calling for snap elections next month, in a move to quell a rebellion in his leftist Syriza party.
Tsipras, who was elected only in January on pledge to renegotiate austerity measures, said he felt “a moral obligation to place this deal in front of the people, to allow them to judge … both what I have achieved, and my mistakes”. However, New Democracy leader Vangelis Meimarakis has pledged to explore all options to avoid snap elections.
In other economic news, data from the Office for National Statistics showed that the U.K. logged its first July budget surplus since 2012.
Public sector net borrowing excluding public sector banks decreased by GBP 1.4 billion to a surplus of GBP 1.3 billion or equivalent to -0.1 percent of gross domestic product in July.
This was the first reported July surplus since 2012. Economists had forecast a surplus of GBP 1.1 billion.
The currency has been lower against the other major currencies, barring the dollar, in the Asian session.
In European trades, the pound, having advanced to a 7-week high of 1.5725 against the greenback in early deals, eased to 1.5674. Continuation of the pound’s downtrend may take it to a support around the 1.56 region. The pound closed Thursday’s trading at 1.5687 versus the greenback.
Extending early slide, the pound slipped to a 3-week low of 1.4989 against the Swiss franc, off early high of 1.5070. The pair was valued at 1.5035 at Thursday’s close. The pound is likely to find support around the 1.48 level.
The pound was trading at 192.75 against the Japanese yen, hovering around an early 11-day low of 192.70. At yesterday’s close, the pair was worth 193.53. The next possible support for the pound may be located around the 191.00 region.
The pound remained near an early 5-week low of 0.7196 against the euro with the pair trading at 0.7192. The euro-pound pair finished Thursday’s deals at 0.7163. If the pound declines further, 0.725 is possibly seen as its next support level.
Flash survey data from Markit revealed that Germany’s private sector grew at the fastest pace in four months in August.
The flash composite output index rose to 54 in August from 53.7 in July. The reading reached a 4-month high in August.
Looking ahead, the flash U.S. manufacturing PMI and Eurozone flash consumer sentiment index for August are slated for release in the New York session.
The material has been provided by InstaForex Company – www.instaforex.com