Aug 23 Reuters Sterling was slightly higher against the dollar on Tuesday after Purchasing Managers39; index PMI data from Britain showed that business activity slowed roughly in line with expectations.

The PMI composite flash estimate dropped to 50.9 in August from 52.1 in July. Economists polled by Reuters had forecast the index would fall to 51.1.

The pound hit a fresh 212year low versus the greenback earlier in the session on concerns that Britain39;s PMI data would have kept the pound without any solid floor against the dollar.

It erased its early losses after data from the euro zone39;s lead economies showed business activity slowed less than expected in August.

By 0901 GMT, sterling rose 0.05 versus the dollar to 1.1771 after hitting its lowest since endMarch 2020 at 1.1718.

The U.S. dollar index was marginally lower while the euro dropped to a fresh twodecade low by renewed concern that an energy shock will keep inflation elevated and makes a recession in Europe all but certain. 

The pound remains weak and might fall further probably even down to 1.15 against the greenback due to recession fears in the UK and despite PMI data roughly in line with expectations, said Roberto Mialich, strategist at Unicredit.

Analysts said sterling was no longer positively correlated with interest rates as recession fears were prevailing over any further potential monetary tightening after the Bank of England BoE lifted the policy rate to 1.75 early this month.

The pound…