The GBPUSD currency pair was trading up over 60 pips after positive flash PMI data from the UK docket. IHS Markit/CIPS released the PMI data, where the manufacturing and service PMIs both beat analysts' expectations.
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The Markit/CIPS Flash UK Manufacturing PMI was recorded at 49.2% beating analysts' consensus estimates of 47.2%, and was just shy of the crucial 50.0% level. The Flash UK Services PMI rose to 53.3% versus the expected 49.2% figure pushing it back into growth territory.
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The upbeat PMI prints reflected optimism among purchasing managers, who said they had witnessed a surge in customer demand and improved supply dynamics as bottlenecks were resolved. The managers also cited improved consumer confidence and falling inflation as fueling optimism.
The Composite PMI print also surprised to the upside by coming in at 53.0% compared to 48.5% in January, reflecting the optimism described above. However, most businesses were worried about higher prices that could stifle consumer demand since they needed to pass on higher operating costs to consumers.
Companies singled out higher energy bills, food costs and wages as the primary reasons they are considered hiking prices. However, UK private businesses also noted an increase in the work they received in January for the first time in 7 months.
Investors were also pleased by the UK public finances report released earlier today, which showed that the country had a surplus of £5.4 billion in January, far exceeding analysts' expectations of an £8 billion deficit.
The expected deficit would have been the biggest in the UK over the past 25 years. However, the surplus prevented the UK from recording its worst fiscal deficit over two decades. The fiscal surplus was attributed to higher tax collection.
The GBPUSD currency pair had rallied over 125 pips from its daily lows at one time before giving up some of its gains by the time of writing. Still, the strong US dollar capped the gains made by the Sterling pound.
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The GBPUSD price chart.
The GBPUSD currency pair was trading up 60.2 pips (0.50%) as the pound rallied against the dollar.
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