The pound fell against its major counterparts in the European session on Monday, after data showed that British manufacturing growth moderated unexpectedly in March to the weakest level in four months.
Survey results from IHS Markit and Chartered Institute of Procurement & Supply showed that the U.K. purchasing managers' index for the manufacturing sector dropped to 54.2 in March from 54.5 in February, which was revised down from 54.6. In contrast, economists had expected the index to rise to 55.0.
Investors focus on the U.K. construction PMI on Tuesday and the services survey on Wednesday to assess the strength of the UK economy.
Regarding Brexit talks, the UK government is defending Gibraltar's sovereignty and has clarified that Spain cannot claim no new powers over the island.
"We will never enter into arrangements under which the people of Gibraltar would pass under the sovereignty of another state against their freely and democratically expressed wishes", the U.K. Prime Minister Theresa May said in a statement on Sunday.
The pound showed mixed performance in the Asian session. While the currency held steady against the greenback and the euro, it rose against the yen. Against the franc, it dropped slightly.
The pound edged down to 0.8533 against the euro, from a high of 0.8488 hit at 5:15 am ET. The next possible support for the pound may be found around the 0.88 region.
Final data from IHS Markit showed that Eurozone factory activity grew at the fastest pace in almost six years in March, as initially estimated.
The factory Purchasing Managers' Index rose to a 71-month high of 56.2 in March, in line with flash estimate, from 55.4 in February.
The pound reversed from an early high of 1.2556 against the greenback and weakened to 1.2505. Continuation of the pound's downtrend may see it challenging support around the 1.23 level.
The pound, having advanced to 139.90 against the yen at 1:30 am ET, reversed course and slipped to 139.23. On the downside, 136.00 is likely seen as the next support level for the pound.
The latest survey from Nikkei showed that Japan's manufacturing sector continued to expand in March, although at a slower pace, with a manufacturing PMI score of 52.4.
That's down from 53.3 in February, although it remains above the boom-or-bust line of 50 that separates expansion from contraction.
The pound dropped to 1.2522 against the Swiss franc, following an advance to 1.2579 at 6:30 pm ET. The pound is seen finding support around the 1.24 region.
Looking ahead, U.S. ISM manufacturing index for March and construction spending for February are slated for release in the New York session.
At 10:30 am ET, Federal Reserve Bank of New York President William Dudley is expected to speak at the presentation of the Bank's survey of Household Borrowing, Student Debt Trends, and Home-ownership, in New York.
At 3:00 pm ET, Federal Reserve Bank of Philadelphia President Patrick Harker is expected to speak at the University of Pennsylvania School of Engineering, in Philadelphia.
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