The Pound Sterling gained strength during trading on Thursday after a tough week of losses. Concerns over Theresa May’s ability to carve out a favorable trade agreement as part of the Brexit have eased. One currency strategist in London pointed out that while political noise could weigh on the Pound, without any additional bad news, that pressure is limited. At the same time, there are some hopes that the Bank of England could take a decidedly hawkish stance at next week’s policy meeting. On Tuesday, Mark Carney, the BoE Governor, was upbeat in his assessment of the UK’s economic future and his talk on inflation has led to speculation that interest rates could be upwardly adjusted sooner rather than later.
As reported at 11:55 am (GMT) in London, the GBP/USD was trading at $1.422, a gain of 0.17%; the pair earlier hit a peak of $1.4275 while the low stands at $1.4158. The EUR/GBP is down 0.04% and trading at 0.87421 Pence, but well off the session trough of 0.87150 Pence.
UK PMI Disappoints
Even disappointing economic data released earlier today failed to knock the wind out of the Pound’s sails. The reading for Manufacturing PMI for January, as reported by Markit Surveys, was at 55.3, down from the 56.5 expected; the December reading was also adjusted down from 56.3 to 56.2. The Pound is down about 9% (trade-weighted) since the June 2016 referendum to leave the EU, but it bounced about 8% higher from the October 2016 low. Strategists say that the Pound is more or less trading at “normal” levels, and that suggests to them slower gains ahead for 2018, at least against the US Dollar.