The pound has risen in value this morning, Wednesday January 3, against the euro.
Sterling now converts to €1.1291, according to Bloomberg figures at 7:14am this morning.
This represents an increase compared to yesterday, when it stood at just €1.1250.
It follows the release of positive UK manufacturing data for December 2017, which inspired economic confidence in the pound.
It also coincides with news this morning the British government is seeking to join trade group Trans-Pacific Partnership to support trade after Brexit.
Laura Parsons, currency analyst at Torfx, commented on the positive effect the manufacturing data from Markit, a global financial information and services company, had had on the pound.
“Pound Sterling exchange rates broadly strengthened on Tuesday thanks to hopes that UK manufacturing output will remain robust in 2018.
“Markit published its manufacturing PMI for December and although output was down from November’s dizzy highs, it remained substantially above the 50 mark separating growth from contraction (at 56.3) and there were many positives to be taken from the data.
“Markit’s Rob Dobson noted; ‘UK manufacturing ended 2017 on a positive footing. […] The outlook is also reasonably bright, with over 50 per cent of companies expecting production to be higher one year from now.’
Laura also noted the pound’s rise was in spite of “impressive” data from the Eurozone, which holds the rival euro currency.
She warned sterling’s current position could be weakened by positive data from Germany, coupled with a stagnant UK construction PMI.
“The GBP/EUR exchange rate was able to strengthen following the report’s publication in spite of the Eurozone publishing its own impressive manufacturing report.
“However, Sterling could slip against the euro later today if Germany’s unemployment rate declines as expected and the UK’s construction PMI shows no change in output in December.”
The increase in the pound’s value is welcome news after Laura warned yesterday of “GBP volatility” in the first week of the year.
“Pound movement was limited as 2017 came to a close, but with markets reopening after the New Year break and a few high profile economic reports due for release, we might see some GBP volatility over the next few days.
As it stands, GBP/EUR is trading in the region of €1.124, but the pairing could climb this morning if the UK’s manufacturing PMI impresses.
“Conversely, a decline in manufacturing output would be pound-negative.”