EUR/GBP drifts lower, nearing 0.8700 after Eurozone, UK manufacturing data

• The Euro extends losses after downbeat manufacturing data, approaching lows near 0.8700.
• Eurozone manufacturing activity contracted at a faster-than-expected pace in December.
• UK's Manufacturing PMI remains at levels consistent with moderate growth.

The EUR/GBP extended losses for the third day in a row, although it remains trapped within a tight range, roughly between 0.8700 and 0.8740, in the aftermath of a series of downbeat manufacturing activity data releases in the Eurozone and the UK.

Eurozone’s final HCOB Manufacturing PMI revealed that the sector’s activity contracted at a faster-than-expected pace in December. The final reading has been revised to 48.8 from the preliminary estimation of 49.2 in December. These figures follow a 49.6 reading seen in November and the 50.0 in October, and highlight a declining contribution of manufacturing activity in the region’s GDP.

German final PMI data has been revised down to 47.0, from the 47.7 preliminary estimation, and from November's 48.2 reading. Likewise, Italy’s PMI weakened to 47.9 in December, from 50.6 in November, while Spain's manufacturing activity fell into contraction, at 49.6 from the 51.5 level in the previous month. The only positive reading was France’s activity, which edged up to 50.7 from 50.6 in November.

In the UK, the final $&P Global Manufacturing PMI has also been revised lower, although, in this case, to levels reflecting a mild expansion of the sector’s activity. December’s final reading has been left at 50.6, down from the previous reading of 51.2, and also above November’s 50.2 reading.