The British pound is trading in a narrow range Tuesday. The currency gained some support from a CBI data release, however, investors are looking towards Wednesday’s budget while Brexit comments also weigh.
By 1315 BST, the British pound was trading at $1.3243. A little higher than the $1.3220 it was at ahead of the CBI data, but still below the market open level of $1.3265.
CBI data buoy investors
The ONS public sector finances data was disappointing as the Government’s budget gap widened unexpectedly in October. The latest manufacturing orders survey from the Confederation of British Industry (CBI), however, was much stronger than expected.
Manufacturing orders rose to a balance of +17% in November, the highest level since 1988 and above forecast. Export orders activity was upbeat too. The balance here rose to +20%, above the long-term average balance of -18%.
“UK manufacturers are once more performing strongly as global growth and the lower level of sterling continue to support demand,” said the CBI’s head of economic intelligence, Ana Leach. “Output growth has picked up again, and export order books match the highest in more than 20 years.”
Leach went on to say: “Nonetheless, uncertainty continues to hold back investment and cost pressures remain strong. Manufacturers will be hoping the Budget brings some relief from the business rates burden in particular.”
Budget and Brexit weigh
The British pound gained some upside from the CBI report. However, investors continue to anticipate the Chancellors Budget announcement Wednesday. The way in which Hammond plans to balance the future books will be closely followed.
In the meantime, news the UK is likely willing to pay the EU more than previously offered to secure good divorce terms and comments from David Davis that a deal might not be reached, made investors pause for thought.
"Reaching a deal with the European Union is not only far and away the most likely outcome, it's also the best outcome for our country," Davis said in a speech in London.
"I don't think it would be in the interest for either side for there to be no deal. But as a responsible government it is right that we make every plan for every eventuality," he added.