Better than expected news for the Pound after PMI figures

3 September, 2013

Rob Bastin

After a good performance in August, the pound began the new month and third quarter on the front foot once again. Monday’s gains were supported by the first PMI figures of the week that confirmed a better than expected growth in the manufacturing sector, posting results of 57.2 against a market consensus of 55. Any figure above 50 indicates growth in the this sector. This figure is the strongest growth seen in manufacturing in over 2 and a half years in the UK and marks the 5th consecutive month of expansion. Today at 9:30am we will get the latest Construction PMI figures for the UK and the Services PMI figures are on Wednesday. GBP/EUR is now trading at the best levels since June and more significantly has now reversed the negative trend of the last 4 months. Whilst the forecast is now looking a little more positive, in the short term we have little more to gain against the Euro as rates are currently approaching the same significant point of resistance that held exchange rates throughout April and May. Having gained nearly 3 cents in just 4 days, many would argue that now is the perfect time to buy Euros for anyone with a short term requirement, particularly as we approach the interest rate decisions from the UK and ECB this Thursday. Sterling also saw a cent gain against the USD yesterday at its peak, however the USD remains a stronger currency than the Euro at present and so these gains were short lived. This afternoon at 3pm UK time the US will release their latest manufacturing PMI figures ahead of the big data day of the month for the greenback on Friday with Nonfarm Payrolls. Elsewhere overnight, the RBA held interest rates in Australia at 2.5% as expected. An accompanying statement did not however rule out any further rate cuts in the further but did come with a slightly less dovish tone, saying that “the Board will continue to assess the outlook and will adjust policy as needed”, subsequently strengthening the Australian Dollar by around 1 cent against the pound.