THE TAKEAWAY: UK Manufacturing PMI for July rises more than expected -> Markit doubts index will affect BoE decision -> Pound rises
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The UK Purchasing Managers’ Index for manufacturing rose to a new 2-year high, encouraging hopes for a further expansion of the UK economy in the second half of the year. The PMI rose to 54.6 in July, beating expectations for 52.8 and higher than the revised 52.9 PMI reported for June. The PMI has risen for the fifth straight month and the PMI was above the 50.0 neutral line for four of those months.
Pound investors are looking for the higher PMI’s to continue to translate into stronger GDP growth, following the 0.6% GDP expansion seen in Q1. Stronger expansion may calm worries expressed by the Bank of England last month over the rate of the recovery. “It is unlikely that the Bank of England’s MPC will announce any substantive change in policy direction at today’s press conference on the back of these numbers, preferring instead to wait and see if the broader economic recovery takes a firmer hold,” said Markit Senior Economist Rob Dobson.
The Pound rose against the US Dollar following the release, and GBP/USD has pulled back from a two-week low set yesterday at 1.5124. The pair may continue to see resistance by the 1.5280 figure.
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GBPUSDDaily: August 1, 2013
Chart created by Benjamin Spier using Marketscope 2.0
-- Written by Benjamin Spier, DailyFX Research. Feedback can be sent to instructor@dailyfx.com .
