Pound Rises After Better-Than-Expected U.K. Manufacturing Growth

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Written by
Abigail Morris
Written by

Abigail Morris

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(Bloomberg) -- The pound rose versus the dollar after data showed British manufacturing grew faster than expected in July, bolstered by the strongest jump in export orders in seven years.

Sterling is on track for its third day of gains as a report showed the IHS Markit's factory Purchasing Managers Index climbed to 55.1 in July from 54.2 in June, above analysts' estimates of 54.5.

The headline measure, which was higher than the key 50 level that divides expansion from contraction, is the market's initial look at 3Q data and comes as Bank of England policy makers meet ahead of their latest interest-rate announcement on Thursday. PMI data for construction and services, the largest part of the economy, come later this week.

The pound has “gotten a little bit of support after the bounce in PMI,” says Jeremy Stretch, head of G-10 FX Strategy at Canadian Imperial Bank of Commerce
- “If we see a similar trend in terms of construction and then particularly services on Thursday, that will provide a stronger backdrop to go into super Thursday with the BOE's rate decision”
GBP/USD rises 0.2% to 1.3237 as of 10:00 a.m. in London
- Resistance at 1.3248-60; support at 1.3179-73
- U.K. house prices rose by 0.3% in July versus 1.1% in June, Nationwide data showed on Tuesday
- U.K. Chancellor of the Exchequer Philip Hammond said Brexit will still go ahead in March 2019 despite disagreements in Prime Minister Theresa May's cabinet over a transition period to help businesses adjust to the split
  - “It won't be postponed or delayed. As Michel Barnier, the negotiator on the other side, the EU negotiator, says, the clock is ticking,” Hammond told reporters in Brasilia on Monday after meeting with Finance Minister Henrique Meirelles
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  - Benchmark 10-year gilt yields up 1bps at 1.24%