Forex News – Sterling rises after better than expected UK PMI

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UK manufacturing sector showed unexpected expansion in January, driven by a rise in new orders for the first time in six months as well as growing exports.

According to a data released by Markit and CIPS on Wednesday, the Manufacturing Purchasing Managers’ Index (PMI) jumped to 52.1 from December’s upwardly revised 49.7. This is the highest level since May 2011.

A reading above the 50 mark separates growth from contraction. This is the first time the index records above 50 since September and beat analysts’ forecasts that the manufacturing industry would stall.

The British pound jumped after the data as fears eased that the UK is heading into a recession. GBPUSD hit a high of 1.5786 rising from an earlier low of 1.570.

In addition to a rise in new orders, output also expanded at the fastest pace since March. Manufacturing was also given a boost by an increase in export orders for a second month in a row, with firms reporting better demand from clients in Brazil, China, the Middle East and the United States, Markit said.