Investing.com - The pound trimmed back gains against the dollar and the euro on Monday after data showed that manufacturing activity in the U.K. expanded at the slowest pace in 14 months in August.
GBP/USD was up 0.19% to 1.6627, following the release of the data, off session highs of 1.6644.
Cable was likely to find support at 1.6561, Friday’s low and resistance at around 1.6675.
The U.K. manufacturing purchasing managers’ index fell to 52.5 in August, from a downwardly revised 54.8 in July. It was the weakest growth since June 2013 and missed expectations for a reading of 55.0.
Rising geopolitical tensions, such as the conflict in Ukraine acted as a drag on growth in the factory sector, as growth in new export orders slowed to a five month low amid increasing market uncertainty.
The report said a “broad slowdown” is underway in the U.K. manufacturing sector, as growth in output and new orders continued to slow and the pace of jobs creation also easing.
“It is also becoming increasingly evident that UK industry is not immune to the impacts of rising geopolitical and global market uncertainty, especially when they affect economic growth and business confidence in our largest trading partner the euro zone,” Rob Dobson, senior economist at survey compiler Markit said.
“It therefore looks as if manufacturing will provide a lesser contribution to the UK economic growth story in the third quarter than at the start of the year.”
Elsewhere, sterling trimmed gains against the euro, with EUR/GBP at 0.7901 from 0.7890 earlier.
In the euro zone, data on Monday confirmed that Germany’s economy contracted by 0.2% in the second quarter, in line with forecasts and unchanged from a preliminary estimate.
Separate reports showed that Germany’s manufacturing sector expanded at the slowest pace in 11 months in July, while factory activity in France contracted at the quickest pace in 13 months.
Slowing growth in the euro area looked likely to add to pressure on the European Central Bank to implement fresh measures to shore up the faltering recovery in the region, ahead of its upcoming monetary policy meeting on Thursday.