Pound stuck near 8-month low despite manufacturing growth

LONDON: Sterling traded near an eight-month low against the dollar on Monday despite stronger-than-expected manufacturing sector data as investors remained cautious about a Brexit cabinet meeting later in the week.

The pound has slumped recently because of weakness in the economy, a resurgent U.S. dollar and fears that Prime Minister Theresa May will run out of time to agree a deal with the European Union for life after Britain leaves the bloc next year.

The currency fell more than 6 percent between April and June, its worst quarter since the June 2016 vote to leave the EU.

By 1100 GMT, it was down 0.3 percent at $1.3164. On June 28, it fell to $1.3050, its lowest level since November.

British factories kept up a steady pace of growth in June, PMI data showed on Monday, but that did little to boost the currency.

Data last week showed the economy's slowdown in early 2018 was less severe than first estimated, but business and consumer surveys have painted a mixed picture of the second quarter.

Markets are pricing in an 84-percent chance of a single 25-basis-point increase by the end of 2018 and a 60-percent chance of an August rate hike.

Bank of England officials weighing up the next rise in interest rates have been keen to emphasise the more positive numbers.

But analysts are less sanguine.

The fragile nature of Brexit negotiations with the European Union and sluggishness in the economy will drag on sterling versus the euro in the coming months, UBS Global Wealth Management said in a note to clients.

"Businesses have been fairly resilient in the face of Brexit uncertainty, but they may not stand for much more. If the negotiations drag on we expect confidence in a transition deal to wane," UBS Global Wealth Management economist Dean Turner said.

At a cabinet meeting on Friday, British ministers will try to agree on a common position on Brexit and discuss a new proposal for handling customs with the EU proposed by May's advisers.