Yesterday morning we saw sterling hit its highest level against the US dollar in more than a month as the manufacturing Purchasing Managers’ Index (PMI) figure rebounded, beating expectations. The positive reading was a marked improvement and matched the largest increase in 25 years. The manufacturing sector went back into expansionary territory largely due to sterling weakness post the Brexit vote and the UK still part of the European Union.
Data releases have been positive on the whole so far this week, with improvements in UK consumer confidence and the surprise increase in house prices according to Nationwide. The only real disappointment was the Bank of England (BoE) report, which saw the number of mortgages approved by banks and building societies in July at its lowest for a year and a half.
With the recent run of positive data, the likelihood of a further cut will be reduced and also calls into question the BoE’s decision to cut interest rates. The UK economy has so far been resilient to the effects of the Brexit, and the next chapter of the UK’s place in Europe will be interesting.
Looking ahead to today we have the release of the PMI construction data. The sector is set to improve from last month, but the sector is still expected to remain in contraction. With the raft of positive data out so far, we may see this track back above 50.0, which denotes expansion. Meanwhile, the headline PMI services number carries the most weight and is due for release on Monday.
If you are looking to buy or sell sterling, we suggest contacting your trader now for live rates, news and currency-purchasing strategies.