Pound supported by upbeat manufacturing PMI

The pound firmed against the majority of its peers on Monday following the publication of the UK’s finalised manufacturing PMI.

Trade in Sterling is mixed this morning, with GBP/EUR muted at €1.1865, while GBP/USD holds steady at $1.3121. GBP/CAD is rangebound at CA$1.7732, while GBP/AUD and GBP/NZD firm, trading at AU$1.9442 and NZ$2.1170 respectively.

Looking ahead, USD could experience volatility later this afternoon following the publication of its own ISM manufacturing PMI.

What’s been happening?

The pound was supported on Monday by the publication of the UK’s finalised manufacturing PMI print for August.

The index came in at a two-year high of 52.5, highlighting a strong domestic manufacturing sector, which ultimately saw GBP firm against its peers, further supported by risk-on flows.

Similarly, the Eurozone also released its finalised manufacturing PMI for August, which saw the index remain in contraction territory with a reading of 45.8.

Although the index was revised marginally higher, this still undermined the common currency on Monday as the bloc’s manufacturing sector slumped to an eight-month low.

Turning to the US dollar, data releases were absent from Monday’s data calendar as US markets closed for Labour Day, which also resulted in thin trading conditions in the ‘greenback’.

What’s coming up?

The US dollar could experience notable volatility this afternoon in the wake of the latest ISM manufacturing PMI.

Following July’s disappointing reading, which confirmed the sharpest contraction within the sector since November, last month’s PMI print could also undermine the ‘greenback’ should the data confirm US factory sector growth continued to contract.

Turning to the pound, this morning saw the publication of the British Retail Consortium’s latest retail sales monitor, which rose from 0.3% to 0.8%. Will this be enough to lift Sterling sentiment today amid a lack of any further data releases?

The single currency will see an absence of economic data today, which could leave the euro rudderless, and left vulnerable to shifts in market risk sentiment.