Sterling tumbled across the board on Monday as news of a sharp fall in British manufacturing output fuelled speculation that the next move in Bank of England interest rates could be down. Manufacturing production fell by 1.6 percent in March, confounding market analysts who had predicted a modest rise. Except for June 2002, when factories shut down to celebrate Queen Elizabeth's jubilee, output has not fallen so much in a decade. "The market has focused on the weakness in the manufacturing number and is pushing sterling lower," said Steven Pearson, chief currency strategist at HBOS Treasury Services.
Sterling fell over half a percent to a three-week low of $1.8806 and was trading just above session lows at $1.8825 by 1500 GMT. It was also down half a percent against the euro at 68.14 pence. The Bank of England left interest rates at 4.75 percent for a ninth consecutive month on Monday and a number of analysts are now predicting a rate cut by the end of this year.
Data on Monday showed output prices rose a larger than expected 0.7 percent in April.
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