Investing.com - The pound backed off lows against the dollar on Monday after data showed that the strong upswing in the U.K. manufacturing sector continued last month, but gains were held in check as fears over the unfolding crisis in the Ukraine stoked widespread risk aversion.
GBP/USD recovered from session lows of 1.6702, and was last trading at 1.6740, 0.02% lower for the day.
Cable was likely to find support at 1.6675, Friday’s low, and near-term resistance at 1.6767, Friday’s high.
The Markit U.K. manufacturing purchasing managers’ index for February came in at 56.9, up from a revised 56.6 in January. Analysts had expected the index to tick down to 56.5.
The strengthening domestic market continued to be the main driver of the recovery in the manufacturing sector, Markit said, with production output rising for an eleventh successive month.
The pace of jobs growth reached a 33-month high in February, as the improved performance of the sector encouraged companies to take on more staff.
“The survey suggests we should expect another quarter of robust economic growth in the opening quarter of the year,” Rob Dobson, senior economist at Markit said.
“This mini-renaissance in manufacturing is also driving the sharpest job creation since the middle of 2011, which will support the broader economic recovery through improved consumer confidence and spending."
Sterling’s gains looked likely to remain limited amid fears over the escalating crisis in the Ukraine, following Russian President Vladimir Putin’s decision to send troops into the Crimea region over the weekend.
The move sparked fears that the West will impose economic sanctions against Russia. Russia’s central bank hiked interest rates from 5.5% to 7% on Monday, after the rouble fell to new record lows against the euro and dollar.
Elsewhere, the euro gave up gains against sterling following the U.K. data, with EUR/GBP sliding 0.18% to 0.8229.
Investors were looking ahead to a report on U.S. manufacturing activity from the Institute of Supply Management later Monday.