The pound reached a two month high yesterday following data which confirms that the UK’s manufacturing index expanded even further and smashed expectations.

UK manufacturing PMI rose to 57.2 in August from a figure of 54.8 in July. A separate report by property researcher Hometrack also added to the positive data, who confirmed that the average house value in both England and Wales rose by 0.4% in August following a 0.3% gain in July.

The pound reached a two month high yesterday following data which confirms that the UK’s manufacturing index expanded even further and smashed expectations.

UK manufacturing PMI rose to 57.2 in August from a figure of 54.8 in July. A separate report by property researcher Hometrack also added to the positive data, who confirmed that the average house value in both England and Wales rose by 0.4% in August following a 0.3% gain in July.

Both sets of data added to the better set of data that the UK has been experiencing over the last two months suggesting that the recovery for the UK is continuing at a moderate pace.

The only other notable data came in the form of Markit manufacturing PMI from the euro zone, which marginally rose to 51.4 in August; the highest level since July 2011. There was little effect on the euro however, with the markets eyeing up Thursday’s monetary policy statement from Mario Draghi as well as the ECB’s interest rate decision.

Overnight the Reserve Bank of Australia held their key interest rate at 2.5% as was expected but refrained from mentioning further scope to ease monetary policy. As a result we saw the Australian dollar regain about 0.5 cents against the pound in overnight moves.

Looking ahead to today, data from the US will be in focus; which are broadly expected to show an improvement from the previous month and thus last weeks US dollar strength may well continue today.

UK construction figures released this morning have shown further expansion in August from 57 to 59.1 boosting the pound further this morning. As we stand GBPEUR is 0.43% higher.

Key Announcements:

10.00am – EUR – Producer Price Index (Jul): Expected to reduce to 0.1%.

13.58pm – USD – Markit Manufacturing PMI (Aug): Expected to rise to 54.

15.00pm – USD – Construction Spending (Jul): Expected to improve to 0.3%.

15.00pm – USD – ISM Manufacturing PMI (Aug): Expected to fall to 54.5.