Investng.com - The pound fell to two-week lows against the U.S. dollar on Monday after data showed that the U.K. manufacturing sector expanded at the slowest pace in three months in January.
GBP/USD 1.6370, the lowest since January 17 and was last down 0.37% to 1.6374.
Cable is likely to find support at 1.6308, the low of January 17 and resistance at 1.6475.
Markit said the U.K. manufacturing purchasing managers’ index fell to 56.7 in January, down from 57.2 in December and below estimates for a reading of 57.0.
Although the rate of the expansion in manufacturing output has cooled in recent months strong growth was maintained in January as new orders rose on the back of stronger domestic and overseas demand.
New orders for exports rose to an almost three year high, the report said, as global market conditions improved.
The ongoing rebound in the sector led to further job creation. January saw employment increase for the ninth successive month, with the rate of jobs growth remaining close to November’s two-and-a-half year high.
“The ongoing improvement in the labour market in January adds further to the prospect of unemployment dropping below 7% imminently,” said Rob Dobson, senior economist at Markit.
Demand for the dollar continued to be underpinned as fears over a crisis in emerging markets and concerns over a possible slowdown in China fuelled risk aversion.
Official data released over the weekend showed that China’s manufacturing purchasing managers’ index ticked down to a five month low of 50.5 in January from 51.0 the previous month, in line with market expectations.
A separate report on Monday showed that China’s official services PMI slowed to 53.4 month, from 54.6 in December.
Emerging markets have been hard hit in recent sessions by concerns over the impact of reductions in Federal Reserve stimulus and fears over slowing growth China.
Elsewhere, sterling was lower against the euro, with EUR/GBP advancing 0.56% to 0.8252.
The euro found support after revised data on Monday showed that the euro zone’s manufacturing PMI rose to a 32-month high of 54.0 in January, slightly higher than the preliminary estimate of 53.9.
The common currency looked likely to remain under pressure after data last week showing that inflation in the euro zone slowed in January fuelled fears that the European Central Bank may tighten policy to stave off the risk of deflation.