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Sterling hits two-month high against dollar on robust UK PMI data

Sterling hits two-month high against dollar on robust UK PMI data
© Reuters

The British pound soared to a two-month peak against the US dollar on Thursday, buoyed by better-than-expected UK economic data. The pair reached a high of 1.2569 during the day’s trading session but later settled around 1.2530. This rally was supported by the release of upbeat UK Services and Composite Purchasing Managers’ Index (PMI) reports for November, which both exceeded market forecasts with readings of 50.5 and 50.1, respectively. Moreover, the Manufacturing PMI showed resilience, climbing to 46.7 amid a quieter trading atmosphere due to the US Thanksgiving holiday.

Today, sterling continued its ascent versus the dollar following the positive PMI reports; however, it faced headwinds as GfK Consumer Confidence in the UK dipped more than anticipated to -24.0 amid growing concerns over Bank of England Governor’s remarks on sustained high interest rates suggesting recessionary pressures. This comes despite a recent drop in Consumer Price Index (CPI) inflation to 4.6%. In contrast to the pound’s performance, the (DXY) saw an upswing, backed by surges in US Treasury yields, with the benchmark 10-year note hitting 4.46%. Additionally, market sentiment is influenced by expectations that there may be no further rate hikes from the Federal Reserve, as investors await forthcoming declines in US S&P Global Services and Manufacturing PMIs for more economic insights.

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