Sterling hit a three-week low against the euro on Wednesday after a UK purchasing managers' survey came in sharply lower than expectations, raising concerns the UK economy could struggle in the coming months. Against the dollar, the pound rose strongly, however, as the US currency came under pressure against a range of currencies after upbeat data from China and Australia soothed worries about the health of the global economy and boosted risk appetite.
The UK purchasing managers' index on manufacturing activity fell to 54.3 in August - below all forecasts in a Reuters poll and the lowest level since November last year. The weak data meant the pound underperformed currencies such as the euro and the Australian dollar, and the single currency rose as high as 83.28 pence, its strongest since August 10.
By 1518 GMT, it was up 0.4 percent at 82.90 pence. Against the dollar, however, sterling gained 0.6 percent to $1.5444, above its 200-day moving average currently at $1.5434.
Support was seen near $1.5322, the 38.2 percent Fibonacci retracement of the pair's May-August rally. Sterling had hit a five-week low of $1.5327 on Tuesday. Sterling dipped into negative territory versus the dollar after the UK data but the falls were short-lived, with the pound tracking gains in riskier currencies after strong Chinese and Australian data dampened safe-haven demand for the US unit.
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