February 1, 2019 / 10:23 AM / 2 months ago

Sterling extends losses after weak PMI data

FILE PHOTO: Pound Sterling notes and change are seen inside a cash resgister in a coffee shop in Manchester, Britain, Septem,ber 21, 2018. REUTERS/Phil Noble

LONDON (Reuters) - Sterling extended losses on Friday, falling under a key technical level against the dollar as weak survey data highlighted the degree of uncertainty sweeping across British factories as it heads towards Brexit.

With less than two months to go before Britain leaves the European Union and uncertainty over whether a deal will be agreed in time, British factories scrambled to stockpile goods in January at the fastest rate since records began in the early 1990s, the IHS Markit/CIPS UK Manufacturing Purchasing Managers’ Index (PMI) showed.

The survey also showed deepening pessimism, with output growing by the smallest amount since July 2016.

That sent the pound skidding against the euro initially, with the British currency weakening more than half a percent to a 10-day low at 87.93 pence.

The sharp and sudden losses against the euro rippled over to the dollar, yanking the pound below the 200-day moving average of $1.3045. It was trading at $1.3066, down a third of a percent against the greenback.

A close of the pound below that level would open the door for more potential losses as investors try to figure out whether May’s Conservative Party rallying around her has increased the chances of her securing concessions from the EU or has pushed Britain toward further deadlock and uncertainty.

Reporting by Saikat Chatterjee; editing by Sujata Rao

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