Investing.com - The pound was slightly lower against the dollar on Monday after data showing that activity in the U.K. manufacturing sector ticked higher last month but remained relatively subdued.
Research group Markit said its U.K. manufacturing purchasing managers' index ticked up to 51.9 last month from 51.4 in June, which was the lowest level in over two years. Economists had expected a reading of 51.6.
GBP/USD eased 0.04% to 1.5620 following the report from around 1.5618 earlier.
The rate of growth in new orders slowed to a ten-month low Markit said, as solid demand from the domestic market contrasted with a further decrease in new export business.
New export orders declined for the fourth straight month in July, mainly as a result of the sterling-euro exchange rate hitting competitiveness in euro zone markets.
Sterling has risen almost 10% against the single currency so far this year.
“Although an uptick in the headline PMI breaks the decelerating trend in UK manufacturing, growth remains near-stagnant and suggests that the sector is continuing to act as a drag on the economy," Rob Dobson, senior economist at survey compiler Markit said.
The pound was also slightly lower against the euro, with EUR/GBP at 0.7022, little changed from before the report.
In the euro zone, data on Monday showed that the manufacturing sector continued to expand at a steady pace at the start of the third quarter.
Continuing expansion in Germany, Spain and Italy offset a record contraction of the Greek manufacturing sector last month after capital controls were imposed to avert a collapse of the country's financial system.
Investors were turning their attention to the Institute of Supply Management’s report on U.S. manufacturing activity due out later in the day.
The U.S. dollar index, which measures the greenback’s strength against a trade-weighted basket of six major currencies, rose 0.15% to 97.47.