- Sterling little changed versus euro before Dec. 3 ECB meeting
- Services data in two days forecast to confirm growth
The pound climbed against the dollar as a report showed U.K. manufacturing expanded last month, demonstrating the economy’s resilience even as the growth rate dropped from the fastest pace in 16 months.
Sterling was little changed versus the euro on Tuesday, after earlier reaching its strongest level in almost a week. While a gauge of manufacturing output slipped from October, Markit Economics in London gave an upbeat assessment, saying the industry “maintained its positive start” to the fourth quarter. Bank of England Governor Mark Carney has said that domestic demand was robust even as risks from outside the U.K., including from volatility in emerging markets, remained a threat.
The U.K. currency has trailed behind the dollar in the past month as investors expressed more doubt that the BOE would increase interest rates soon after a Federal Reserve move that market measures and economists’ surveys signal will happen this month. Against the euro, sterling has been buoyed as European Central Bank officials indicated that more stimulus, which typically debases a currency, may be announced as soon as Dec. 3.
“Manufacturing was slightly down on expectations, but in the grand scheme of things it’s still better than it’s been,” said John Goldie, a London-based senior dealer at Argentex LLP. “It’s going to be a very volatile month, with central banks dictating direction.” Argentex, a currency advisory company, was among the top 10 forecasters of the pound against the dollar in the third quarter, according to Bloomberg rankings.
The pound climbed 0.2 percent to $1.5079 as of 11:46 a.m. London time, having fallen to $1.4994 on Monday, the lowest since April 23. Sterling was at 70.27 pence per euro after earlier touching 70.07, the strongest level since Nov. 25.
The Markit Economics gauge of manufacturing was at 52.7 last month, down from a revised 55.2 in October and compared with a reading of 53.6 that was median estimate of economists in a Bloomberg survey. A level above 50 marks expansion. The company’s measure of services output, due Dec. 3, increased to 55 last month from 54.9 in October, according to a separate Bloomberg survey.
U.K. government bonds slipped, with the 10-year gilt yield rising three basis points, or 0.03 percentage point, to 1.86 percent. The 2 percent security due September 2025 fell 0.285, or 2.85 pounds per 1,000-pound face amount, to 101.275.