The pound spiked up against its major counterparts in early European deals on Tuesday, following a rally in European stocks on higher oil prices and upbeat China factory activity growth in December, and as data showed that U.K. manufacturing sector expanded at the fastest pace in 30 months in December.
Survey results from the Chartered Institute of Procurement & Supply/Markit showed that the U.K. Purchasing Managers’ Index rose to 56.1 in December from 53.6 in November. The score was well above its long-run average of 51.5 and the expected level of 53.2.
The headline PMI has signaled expansion in each of the past five months in December.
Oil prices climbed above $54 per barrel, as a landmark deal between OPEC and non-OPEC member countries to reduce global output kicked in on Sunday. The deal earmarks output cut of around 2 millions of crude from the market to rein in the global supply cut and support crude prices.
Chinese factory activity data pointed to continued stabilization, with Caixin manufacturing PMI rising to 51.9 in December, its fastest rate in three years. That beat expectations for a reading of 50.9, which would have been unchanged from November.
The private manufacturing survey results come after official figures over the weekend showed that China’s manufacturing sector expanded at a slightly slower pace in December.
The currency has been trading in a positive territory in the Asian session, with the exception of the euro.
The pound strengthened to a 5-day high of 1.2626 against the Swiss franc, after having fallen to 1.2551 at 5:30 pm ET. Continuation of the pound’s uptrend may see it challenging resistance around the 1.28 mark.
The pound climbed to near 2-week highs of 145.26 against the yen and 0.8467 against the euro, off its early 4-day lows of 143.96 and 0.8530, respectively. The pound is seen finding resistance around 148.5 against the yen and 0.82 against the euro.
The pound bounced off to 1.2291 against the greenback, from a 4-day low of 1.2247 hit at 3:45 am ET. The next possible resistance for the pound-greenback pair is seen around the 1.27 region.
Looking ahead, at 8:00 am ET, German flash CPI for December is set for release.
In the New York session, Markit’s U.S. final manufacturing PMI and ISM manufacturing index for December and construction spending for November will be released.