RTRS:Sterling hits two-week low versus dollar after UK PMI data
(Reuters) - Sterling fell to a two-week low against a firmer dollar on Friday after a survey showed UK manufacturing activity slowed slightly in October.
Sterling fell 0.5 percent on the day to $1.5958, its lowest since October 17.
The manufacturing purchasing managers' index fell to 56.0 last month from a downwardly revised 56.3 in September, below expectations for 56.1.
Still the data pointed to a solid economic recovery, showing the fastest growth in export orders in more than two years. However, many traders believe the recent strength in UK data will not be sustained.
"The PMI data was decent, but that doesn't mean to say sterling can't remain below $1.60 in the coming weeks," said Sasha Nugent, analyst at Caxton FX.
"Sterling has run out of steam in terms of the extent to which data can surprise the market."
More losses could see the pound drop towards the October 16 low of $1.5894, which would be its weakest since mid-September.
Kathleen Brooks, research director at FOREX.com, said the pound would also be vulnerable to broad dollar strength after Wednesday's Federal Reserve statement was interpreted as leaving the door open to scaling back monetary stimulus as soon as December.
But analysts said the pound could notch up more gains against a weak euro due to the contrasting economic pictures in the UK and the euro zone, where concerns are growing about the risks of deflation and rising unemployment.
The euro was last down 0.1 percent at 84.67 pence, having hit a two-week low of 84.45 pence.
Very weak euro zone inflation data on Thursday prompted market speculation that the European Central Bank could loosen monetary policy in order to boost the economy.
Recent UK data, meanwhile, has been mixed. A survey on Wednesday showed consumer confidence fell in October for the first time in six months, although other figures showed house prices rising at their fastest in three years.
BoE policymaker Martin Weale said on Thursday that rapid rises in house prices could crowd out more productive investment. However, this was not currently a key issue for setting monetary policy.
