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UK manufacturing sees 10-month high

UK manufacturing sees 10-month high

The UK economy’s run of form post-Brexit continues after UK PMI manufacturing printed much stronger than expected at 53.3, a ten-month high. This represented the strongest monthly rebound seen in nearly 25 years as last month’s figure was 48.3, then a 3-year low.

UK business confidence also bounced back from the July figure of 105 to highs of 109.7 in August. Any suggestion that the Bank of England will reverse last month’s monetary policy easing after this remarkable turnaround will have a profoundly positive effect on Sterling. The Pound ended the day 1.06% stronger versus the Dollar, hitting fresh three-week highs of 1.3272.

Today’s UK Construction PMI data will be watched very closely. Another strong recovery would reinforce increased confidence in the post-Brexit outlook and potentially trigger a reversal of the aggressive short Sterling positions from earlier in the week.

The Euro slipped by just over a cent versus the Pound during yesterday’s European trading session after positive data from the UK. The Euro saw further selling pressure as European Markit Manufacturing PMI figures printed at 0.1% worse than its initial consensus of 51.8. This left the pair to end the day around the 1.1835 levels.

US Institute for Supply Management (ISM) manufacturing fell to fresh six-month lows of 49.4, which was revised down from 52.6 seen in the previous data release. This was due to a renewing of fears surrounding the strength of the world’s largest economy. The ISM Prices Paid data also missed estimates of 55, falling short at 53 that concluded a poor day for the Dollar versus the Pound.

The Non-Farm payrolls are due this afternoon and this US employment data is likely to cause light trading volumes until it’s release and, potentially, huge volatility after. There has been a lot of talk of how positive figures are likely to trigger any rate hike that we may see in September as the Fed base the overall interest rate decision on unemployment and inflation levels. The markets expect 180k more jobs added in the month of August along with an unemployment rate of 4.8%.

Data to Watch: 9am EUR Italian Gross Domestic Product (Q2).9.30am GBP PMI Construction (Aug). 10am EUR Producer Price Index. 1.30pm USD Unemployment Rate, Non-Farm Payrolls (Aug), Trade Balance (Jul).

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