The UK economy outperformed expectations in January..
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| GBP v USD sees a 1% increase on the week with GBP v EUR unchanged after being 0.8% down just 2-days ago.
UK businesses have shown encouraging resilience in the face of geopolitical tensions by seeing the strongest upturn in private sector business activity since April 2024.
Companies are reporting higher demand both from home and abroad with business optimism returning to the same levels since October 2024. This is a really positive start to the year for the UK in terms of both sentiment and results which aids GBP near and long term.
UK PMI data for January showed a score of 53.9 (above 50 is growth) which easily beat both the prior and expected result (51.4 & 51.5). This is a huge win for the government, businesses and especially the Pound, which has seen its value strengthen across the board (0.3% average.
Shortly before the UK's release we had the EU's, which showed the same figure as last time (51.5) and was below the expected 51.8. Economic growth remains stable and robust and business confidence has soared to a 20-month high. But the Europeans were no match for the British this month.
Onto politics now and yesterday the Pound saw itself under a bit of pressure after the Labour MP of Manchester; Andrew Gwynne, stepped down.
The move triggers a by-election, which the Mayor of Greater Manchester; Andy Burnham, is expected to run for and win. This would allow Burnham the shot of a leadership challenge, something that was doing the rounds last year and will be unwelcomed by financial markets.
Not only is political uncertainty a major headwind for the Pound, but Burnhams' views on social housing and the bond market are very concerning. May's local elections is when this may become a problem for Sterling.
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