Investing.com - Manufacturing activity in the U.K. expanded at the slowest rate in 26 months in June, fueling concerns over the outlook for second quarter growth, according to data released on Wednesday.
Research group Markit said its manufacturing purchasing managers’ index fell to 51.4 last month from a downwardly revised 51.9 in May. Economists had expected the index to tick up to 52.5.
On the index, a reading above 50.0 indicates industry expansion, below indicates contraction.
Although domestic market conditions held up relatively well in June, leading to higher inflows of new business, companies reported that new export orders fell on the back of subdued demand from Europe, partly due to the sterling exchange rate.
“The UK manufacturing sector had a disappointing second quarter overall. Growth trends in output and new orders were the weakest since the opening quarter of 2013, as a strong sterling exchange rate and subdued demand from mainland Europe offset the continued solidity of the domestic market,” Rob Dobson, senior economist at survey compiler Markit said.
GBP/USD was trading at 1.5678 from around 1.5702 ahead of the release of the data, while EUR/GBP was at 0.7082 from 0.7073 earlier.
Meanwhile, European stock markets remained broadly higher. London’s FTSE 100 was up 0.72%, the EURO STOXX 50 rose 0.82%, France's CAC 40 advanced 0.84%, while Germany's DAX was up 0.74%.