Pound Climbs As UK Factory Activity Growth Accelerates

The pound strengthened against its major counterparts in early European deals on Wednesday, as the UK manufacturing sector activity expanded notably in October before the Bank of England decision tomorrow.

Survey data from IHS Markit showed that the IHS Markit/Chartered Institute of Procurement & Supply Purchasing Managers' Index rose to 56.3 in October from revised 56.0 in September.

The expected score was 55.9. The headline PMI has now signaled expansion for 15 consecutive months.

The currency was also buoyed by rising European shares, as Catalonia worries eased and encouraging data from the U.S. and China stoked optimism about the global economy.

Investors looked ahead to the FOMC decision later in the day. While no policy changes are expected, investors may get some clues in the policy statement as to whether the U.S. central bank is on track to raise rates in December.

The Bank of England will reveal its interest-rate decision on Thursday, with traders bracing for what could be the central bank's first rate increase in more than a decade.

The currency showed mixed performance in the Asian session. While it rose against the franc and the yen, it held steady against the greenback and the euro.

The pound climbed to 151.79 against the yen, its highest since September 25. The pound is seen finding resistance around the 153.00 region.

Survey data from IHS Markit showed that Japan's manufacturing activity continued to expand strongly in October, underpinned by solid expansions in output, new orders and employment.

The Nikkei Manufacturing Purchasing Managers' Index, or PMI dropped marginally to 52.8 in October from 52.9 in September. However, any reading above 50 indicates expansion in the sector.

The pound that finished Tuesday's trading at 0.8768 against the euro hit more than a 4-month high of 0.8738. Continuation of the pound's uptrend may see it challenging resistance around the 0.84 region.

The U.K. currency firmed to near a 3-week high of 1.3321 against the greenback and more than a 4-month high of 1.3329 against the franc, up from Tuesday's closing values of 1.3282 and 1.3249, respectively. Further uptrend may see the pound challenging resistance around 1.34 against both the greenback and the franc.

Looking ahead, ADP private payrolls data and ISM manufacturing index for October and construction spending for September are set for release in the New York session.

At 1:15 pm ET, SNB Governing Board Member Fritz Zurbrugg will deliver a speech titled "Loans, Debt, and Growth" at the University of Bern.

At 2:00 pm ET, the Fed announces its decision on monetary policy. The central bank is widely expected to leave interest rates unchanged at 1 percent to 1.25 percent range.

The Bank of Canada Governor Stephen Poloz will testify along with Senior Deputy Governor Carolyn Wilkins before the Standing Senate Committee on Banking, Trade and Commerce, in Ottawa at 4:15 pm ET.

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De Mar 2024 à Avr 2024