The pound ended its seven-day rally against the dollar after data showed U.K. manufacturing activity grew at a much sluggish pace in March than initially forecasted.
The sterling also declined against most of its 16 major counterparts after the Bank of England said an impromptu raise in interest rates risks causing financial instability. Reports that Weir Group placed a bid to buyout Finland’s Metso Oyj for 3 billion pounds also contributed to the pound’s decline.
“The pound erased earlier gains after the manufacturing data, which came in weaker than expected,” Jane Foley, a London-based senior currency strategist at Rabobank International told Bloomberg. “The headline number was actually not bad but the market reaction suggested a lot of good news about the U.K. economy has already been in the price.”
The pound fell 0.1 percent to $1.6649 as of 4.28 p.m. in London, erasing its previous six day-gain of 1.1 percent. It also fell 0.4 percent against the euro to 82.95 pence per euro, the lowest since March 10.
An index for U.K. factory activity, based on a poll of purchasing managers, slid to 55.3 in March down from 56.2 the previous month, according to Markit Economics. This was less than the median estimate of 56.7 in a Bloomberg survey of analysts.
Weir, a maker of pressure pumps and whose market capitalization is 50 percent bigger than Metso’s, tabled a proposal for an all-share merger to the Finnish rock-crusher maker. The news of the bid saw Metso’s shares surge as much as 22 percent in Helsinki.
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