Sterling leaps to a 6-month high against dollar
Sterling rose to a five-and-a-half month high against a broadly weaker dollar ($1.5764) on Monday morning as stronger equities lifted investors' appetite for riskier currencies.
The pound also leapt to a near-four week high against the euro to 82.86 pence.
Mark Bolsom, head at the UK trading desk at Travelex Global Business Payments, said that the encouranging PMI manufacturing data for July was encouraging as it clearly showed Britain was growing at a steady pace.
The data was in-line with expectations, hitting 57.3. A PMI of more than 50 represents expansion of the manufacturing sector. A reading under 50 represents a contraction, while a reading at 50 indicates no change.
Ian Kernohan, economist at Royal London Asset Management (RLAM), said: "Another strong PMI release, suggesting that momentum built up in the second quarter has continued."
Mr Bolsom agreed, adding: "Momentum is building in the UK economy, which seems to have turned a corner since the contagion fears during the eurozone crisis two months ago.
"Investors are currently reassured about the pace of recovery and this is helping to support the pound. Market focus remains on the U.S., where fears of a double-dip are increasing."
In the short-term, Mr Bolsom expects to see continued support for the pound as UK data continues to out-perform that in the U.S.
He added: "In the medium-term however, I would expect the UK government’s austerity measures to impact the pound’s strength and continued economic growth in the UK."
