The Pound Sterling Live - The Heart-Beat of the British Pound

British Pound Sterling Live on Wednesday: GBP in strong advance vs USD as UK manufacturing data in strong showing

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Category: The Pound Sterling Live - The Heart-Beat of The British Pound

Published on Wednesday, 02 January 2013 09:37

Written by Sam Coventry

13:36: Sterling less attractive in 2013, but still expected to gain

More from Scotiabank:

"Sterling is a less attractive play in 2013 than it was in 2012 particularly as the UK’s rating is increasingly at risk, monetary policy is likely to remain expansionary and the UK’s economic outlook is weighed down by Europe. However, we expect modest appreciation year-over-year as the UK continues to benefit from European diversification flows, positive sentiment and a credible and established fiscal plan."
13:32: GBP to have strong 2013

Camilla Sutton, Chief Currency Strategist at Scotiabank:

"Our 2012 forecasts performed well for GBP, CAD and AUD; however we expected EUR weakness in 2012, which failed to materialise; and we underestimated JPY weakness, calling for just a 7% drop when it fell almost 13%

"Looking out to 2013, we expect CAD, GBP and AUD to strengthen, but EUR and JPY to struggle."

11:42: Upgrade for GBP/USD

 Jyske Bank upgrade the pound dollar exchange rate to Neutral from Sell:

"The USD weakening in the wake of the US budget agreement was more than GBPUSD could stand. The very strong level of resistance at 163-163.20 has been breached. The breach to the upside increases the risk of further upside (we do not expect this, however)."

9:30: Strong start on the data front

The pound sterling has been aided by UK manufacturing PMI data which has come in at 51.4 - a massive beat on analyst forecasts.

The pound euro exchange rate is unchanged on a daily basis; GBP/EUR is at 1.2314.

The pound dollar exchange rate is 0.45 pct higher at 1.6328.

The pound Australian dollar rate is 0.53 pct lower at 1.5558.

A note from Lloyds Bank says:

"UK PMI manufacturing data will be the main focus today, but we are not holding out any great hopes given the continued softness of the Eurozone data.

"Nevertheless, GBP has been one of the biggest gainers in the wake of the fiscal cliff deal, with GBP/USD breaking to the highest level since 2011. For now the pound has been treated as a risk positive currency that will benefit from this story, but we remain unconvinced that this is justified by UK fundamentals, and expect the 1.6380 high seen overnight to prove an effective cap."