The British pound strengthened against the US dollar in Wednesday morning trading, boosted by an upbeat manufacturing purchasing managers index (PMI). News the European Union’s chief Brexit negotiator, Michel Barnier, is willing to speed up talks, was also supportive.
By mid-morning in the UK trading session, the British pound was at $1.3307. Although it was a little lower than the post PMI release high, of $1.3318, that cable has remained above the key $1.33 level is a positive, technical sign.
Data specialists IHS Markit, who compile and publish the index, said the manufacturing PMI rose to 56.3 in October, from September’s 56.0. An index level above 50 represents expansion, while below that number shows contraction.
The report, which covers private sector activity, showed an increase in new orders and output in the first month of the fourth quarter of 2017. Job creation was also strong, rising to a more than three-year high.
“UK manufacturing made an impressive start to the final quarter of 2017 as increased inflows of new work encouraged firms to ramp up production once again,” said Rob Dobson, director at IHS Markit.
The survey also showed that while domestic new order growth accelerated in October, there was a slight slowdown in the pace of growth of new export orders. A slightly stronger sterling ahead of a likely interest rate hike, was suggested as the most probable cause.
The strong start to the final quarter of the year is a good sign for the health of the UK’s economy. And, as with Wednesday’s release of the Nationwide house price index, it further firms expectations the Bank of England will announce a rate hike, Thursday.
Brexit negotiations to gather pace
Economic data isn’t the only detail currency investors consider. To that end, news the EU’s Barnier has suggested he’s willing to speed up Brexit talks, also proved supportive.
According to a Reuters report, Barnier said the agenda and other relevant details for the next round of Brexit talks would be set “in (the) next few hours or days”.
Investors are likely hopeful this means the all-important trade negotiations will soon get underway.