05:18 AM EDT, 06/03/2024 (MT Newswires) -- British pound sterling underperformed other major currencies during early European trade on Monday as London stocks lagged behind counterparts in Europe and Asia while the local bond market outperformed.

GBP/USD was quoted 0.28% lower around 1.2701, making sterling the worst-performing currency in the G10 basket by a small margin to start the month, as yield spreads worked against the currency and the local stock index lagged counterparts in Europe and Asia.

Front-end UK government bond yields were down more than 1%, leaving spreads with Europe and the US tighter, while a modest intraday loss left the benchmark FTSE 100 stock index trailing peers in Europe and Asia.

Local economic newsflow was also unhelpful for sterling after the S&P Global Manufacturing PMI rose to 51.2 in the final reading for May, up from 49.1 previously but below the consensus for a 51.3 reading.

There is no economic data of significance released in the UK through the remainder of the week, which leaves sterling trading as a function of developments elsewhere in other markets.

Friday's US non-farm payrolls report and the earlier readings of the Institute for Supply Management PMI surveys of the US manufacturing and services industries will be the highlights for GBP/USD in the week ahead.