GBP/USD steadies above 1.3400 after UK Final Manufacturing PMI revised sharply higher to 58.0 in Feb

The UK manufacturing sector activity expanded more than expected in February, the final report from IHS Markit confirmed on Tuesday. 

The seasonally adjusted IHS Markit/CIPS UK Manufacturing Purchasing Managers’ Index (PMI) was revised sharply higher from 57.3 to 58.0 in February, beating expectations of 57.3.

Key points          

Output and new orders expand at quicker rates.

New export orders decrease.

Input price inflation remains elevated.

Rob Dobson, Director at IHS Markit, commented on the survey

“February saw rates of expansion in the UK manufacturing production and new orders both accelerate. Growth was boosted by stronger domestic demand and by firms catching up on delayed work as material shortages and supply chain disruptions started to dissipate. Consumer goods output in particular also benefitted from increased sales due to a further easing of COVID restrictions.”

“However, the trend in new export orders is less positive, slipping back into contraction after January’s short-lived uptick. While companies maintain a positive outlook for the year ahead, rising headwinds, especially the intensifying geopolitical backdrop, are ratcheting up near-term risks to demand and confidence.”

GBP/USD reaction

At the press time, GBP/USD is holding the upside above 1.3400, currently trading at 1.3425. The spot is modestly flat on the day.