Sterling climbed against the US dollar and the euro following an unexpected rise in UK manufacturing data , which added weight to the UK’s economic recovery and dampened expectations that the Bank of England will extend quantitative easing.
Analysts were predicting the index would fall to 53.2, however, the Purchasing Managers Index (PMI) rose to 54.9 in October from 53.4 in September. The pound jumped to a session high of $1.6089 against the greenback and €1.1545 against the single currency.
The pleasing figure followed on from positive GDP data last week which showed that the economy grew by 0.8%, double the market’s expectation in Q3. This run of encouraging data from the UK economy all but confirms that the Bank of England will hold fire on further quantitative easing when the MPC meets later in the week (Thursday).
In other news, the currency market are generally quiet today with no big moves as investors wait to see what happens in the slew of announcements due later in the week. This is definitely the calm before the storm!
Tom Hampton
Analyst – Caxton FX
