LONDON, Jan 3 Reuters Sterling fell against the dollar, which swept higher against a range of currencies on Tuesday, while British manufacturers reported one of the sharpest falls in activity in over a decade.

The pound was down 1 to 1.19320, its biggest drop since midDecember, and was 0.1 higher against the euro, trading at 88.41 pence .

The downward swing can be attributed to a stronger dollar rather than UKspecific factors, market sources said.

I think it is more a strong dollar story, given that eurusd, usdjpy etc have shown similar price action since the openings, Stuart Cole, head macro economist at Equiti Capital, said.

The dollar where investors usually head when risk sentiment is on moved up to a twoweek high, even as European equities rallied 1.7

There is a sense of optimism in the markets this morning, reflected in the rallies we have seen in equities, although whether we are seeing the markets overreacting to better news remains to be seen, said Cole.

The pound remains not far off a six month high of 1.24460 touched on Dec. 14, but the outlook is murky as recession fears, high inflation and a costofliving crisis weigh on the British economy.

The SP GlobalCIPS UK manufacturing Purchasing Managers39; Index PMI was expected to sink to 45.3 in December from 46.5 in January, its lowest since May 2009 apart from two months at the start of the COVID19 pandemic in 2020.

The reading released on Tuesday was stronger than an initial estimate of 44.7…