Sterling rises following UK positive data

The Pound Sterling (GBP) has risen to 1.2660 in early New York session due to the UK’s improved economic outlook and increasing home prices. The GBP/USD pair is showing strength as recent economic indicators suggest the UK economy is on track to return to growth after falling into a technical recession in the second half of 2023.

A weaker US Dollar due to poor United States Institute of Supply Management (ISM) Services PMI data for March also boosted the pair. The UK’s Manufacturing PMI expanded in March after contracting for 20 straight months, driven by robust domestic demand. Strong UK factory data propelled business optimism to its highest level since April 2023, with 58% of manufacturers expecting their production level to increase over the coming 12 months.

British house prices rose 1.6% in March, the highest pace since December 2022, suggesting that the real estate sector is holding up despite historically higher interest rates. The Bank of England (BoE) Decision Maker Panel (DMP) survey showed most firms see selling prices and wage inflation cooling down over the next year. The Pound Sterling will be guided by market expectations over Bank of England rate cuts, with investors expecting the BoE to kick-start the rate-cut cycle in June as UK inflation is slowing consistently.