Sterling tumbled to its lowest in over a year versus the euro on Tuesday and also fell against the dollar after disappointing UK manufacturing data prompted investors to push back forecasts of a UK interest rate rise. The euro rose 1 percent on the day to 90.02 pence, its highest since March 2010, and is now poised to rise further, analysts said, due to a widening divergence in UK and eurozone monetary policy expectations.
The UK Markit/CIPS manufacturing PMI headline index fell to 54.6 in April, its lowest since September, from a downwardly revised 56.7 in March and was well below the 56.9 consensus forecast in a Reuters poll. Sterling's trade-weighted index, which measures the pound's value against a currency basket, fell to 78.8, its weakest reading since October 2010.
"Investors were looking for any excuse to sell sterling this week, and the PMI figures certainty provided that," said Kathleen Brooks, research director at forex.com. Against the dollar, sterling was last down 1 percent on the day at $1.6484, retreating from $1.6747 hit late last week, its strongest since November 2009.
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