2024.01.0212:42:00UTC+00Pound Drops As U.K. Manufacturing Downturn Intensifies

The pound weakened against its major counterparts in the European session on Tuesday, as the nation's manufacturing activity contracted at a faster pace in December as output fell sharply amid weaker demand conditions both domestically and internationally.

Survey results from S&P Global showed that U.K. manufacturing PMI dropped to 46.2 in December from a seven-month high of 47.2 in November.

The flash score was 46.4. Any reading below 50 indicates contraction in the sector.

Manufacturing production declined for the tenth successive month in December, as consumer and intermediate goods sub-industries suffered downturns in December, more than offsetting expansion in investment goods.

New orders fell for the ninth straight month, linked to a weak economic backdrop.

The pound touched 1.2645 against the greenback, its lowest level since December 21. The currency may possibly face support around the 1.24 level.

The pound eased to 179.47 against the yen, from an early 5-day high of 180.65. This may be compared to a 5-day low of 179.26 seen in the previous session. The currency is seen finding support around the 174.00 level.

The pound retreated to 1.0735 against the franc, off an early 5-day high of 1.0787. The currency is poised to challenge support around the 1.05 level.

After rising to nearly a 2-week high of 0.8645 against the euro at 3:55 am ET, the pound reversed direction and dropped to 0.8678. The currency is likely to locate support around the 0.88 level.

Looking ahead, U.S. construction spending for November will be released in the New York session.