Pound Falls As U.K. Factory PMI Hits 8-Month Low

The pound slipped against its major opponents in the European session on Thursday, as British manufacturing sector expanded at the weakest pace in eight months in February.

Survey data from IHS Markit and the Chartered Institute of Procurement & Supply showed that the Purchasing Managers' Index, or PMI, dropped slightly to 55.2 in February from 55.3 in January. Economists had expected the index to fall to 55.0.

However, any reading above 50 indicates expansion in the sector.

Further undermining the currency was risk aversion, as investors became cautious ahead of Federal Reserve chair Jerome Powell's second congressional testimony later in the day.

His appearance comes two days after House Testimony, where he advocated the case for aggressive Fed rate hikes amid strong economic performance.

The currency held steady against its major rivals in the Asian session, with the exception of the yen.

The pound declined to near a 2-week low of 1.2979 against the Swiss franc, from a high of 1.3020 seen at 3:15 am ET. The pound is likely to find support around the 1.27 level.

Data from the State Secretariat for Economic Affairs showed that Switzerland's economy expanded more than expected at the end of 2017.

Gross domestic product climbed 0.6 percent sequentially in the fourth quarter.

The pound fell back to 146.56 against the yen, from an early high of 147.15. This may be compared to near a 6-month low of 146.47 set at 8:15 pm ET. On the downside, 143.00 is seen as the next support level for the pound.

Survey data from the Cabinet Office showed that Japan's consumer confidence weakened unexpectedly in February, though slightly.

The seasonally adjusted consumer confidence index dropped to 44.3 in February from 44.7 in January.

Reversing from an early high of 1.3771 against the greenback, the pound weakened to near a 2-month low of 1.3727. The pound is seen finding support around the 1.35 mark.

The pound dropped to near a 2-week low of 0.8877 against the euro and held steady thereafter. The pair was worth 0.8861 when it closed deals on Wednesday.

Final data from IHS Markit showed that the Eurozone manufacturing sector continued to expand at a robust pace in February but the pace of growth slowed from January.

The factory Purchasing Managers' Index fell to a 4-month low of 58.6 from 59.6 in January.

Looking ahead, U.S. jobless claims for the week ended February 24, personal income and spending data for January, ISM manufacturing index for February and construction spending for January are set for release in the New York session.