Pound Spikes Up After Positive UK PMI Data

The pound firmed against its major counterparts in the European session on Friday, after U.K. manufacturing sector activity accelerated to its highest level since April last year in February, easing some of the fears over the economy.

Survey results from IHS Markit and the Chartered Institute of Procurement & Supply showed that the manufacturing PMI rose to a 10-month high of 51.9 in February from 50.0 in January. Economists had forecast a score of 49.7.

The flash composite output index remained unchanged at 53.3 in February. The reading was above the forecast of 52.8.

The services Purchasing Managers' Index dropped to 53.3 in February from 53.9 in January. The reading was forecast to rise by 53.4.

Sentiment faded after a rapid rise in the number of coronavirus infections outside of China.

China's commerce ministry said January and February exports and imports will be hit by the epidemic that has severely disrupted the world's second-largest economy.

The pound strengthened to 2-day highs of 0.8343 against the euro and 1.2952 against the dollar, from its previous lows of 0.8381 and 1.2874, respectively. The pound is seen finding resistance around 0.82 against the euro and 1.31 against the dollar.

The pound appreciated to more than a 2-month high of 144.89 against the yen, after falling to 143.72 in early deals. Next likely resistance for the pound is found around the 147.00 level.

Data from the Ministry of Internal Affairs showed that Japan's inflation slowed in January after rising in the previous month.

The consumer price index increased 0.7 percent year-on-year in January, slower than 0.8 percent rise in the preceding month. This was in line with economists' expectation.

Erasing an early low of 1.2663 against the Swiss franc, the pound gained to 1.2714. Immediate resistance for the pound is seen around the 1.31 level.

Looking ahead, U.S. existing home sales for January are due in the New York session.