20 November 2007, 15:55  Pound strengthens slightly after strong CBI survey

The pound strengthened slightly after the CBI's latest industrial survey revealed that the UK manufacturing sector remains resilient. The Confederation of British Industry said that the balance of companies polled reporting that their total order books were above normal rebounded to +8 pct in November, from minus 6 pct in October, and far better than forecasts for a further decline to minus 8. Elsewhere, the output volume balance declined only slightly to +9 pct from +10 in Oct. "It would seem that sterling's rise against the dollar in recent weeks has not impacted UK exporters too hard (so far), nor have rising oil prices," said Jodie Tiller at CIBC World Markets. However, with the balance of respondents expecting prices to rise in the next three months jumping to +21 pct from +14, the Bank of England will remain concerned about manufacturers' pricing intentions, and how this will feed through into inflation overall. "While the health of the manufacturing sector is encouraging, evidence of lingering price pressures will concern the Monetary Policy Committee," said Paul Dales at Capital Economics. The pound briefly strengthened to 2.0646 against the dollar shortly after the data, from 2.0620. Against the euro, sterling rose to 0.7157 from 0.7165 before the data.

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