Sterling lost ground on Monday despite stronger-than-expected British manufacturing data as markets remained convinced the Bank of England is unlikely to raise interest rates anytime soon.
British factory growth galloped ahead at its strongest rate in nearly two years in June, beating forecasts for a steady reading, while orders and output also charged up, the CIPS/RBS Purchasing Managers' Index showed.
While the data are expected to revive the debate about a hike in UK rates, it is unlikely to push the central bank into tightening its monetary policy in the near future.
"It came in stronger than expected so sterling got a bit of a boost versus euro and dollar on the back of that," said Geraldine Concagh, economist at AIB Group Treasury. "Our expectation is that rates will remain on hold for the time being and I don't see that data changing that," she added. At 1402 GMT, sterling had lost nearly a third of a percent to 69.34 pence per euro, having revisited Friday's two-month low against the single currency at 69.46 pence. Sterling also lost 0.2 percent versus the dollar at $1.8442.
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