British pound edged higher against the US dollar on Thursday, after the Confederation of British Industry (CBI) reported that manufacturers orders in the United Kingdom registered the largest increase since 1995 in November, while another report said nations budget deficit narrowed in October.
GBP/USD climbed to a daily high at 1.6141 at 12:10 GMT, after which consolidation followed at 1.6131, rising 0.16% for the day. Support was likely to be received at November 19th low, 1.6060, while resistance was to be encountered at November 20th high, 1.6178.
According to data by the Confederation of British Industry (CBI), the index, gauging orders in manufacturing in the United Kingdom, rose at the fastest pace since mid-1990s during the three months through November, which suggested that recovery has begun gaining momentum, signs of which have been observed in January this year. The manufacturing gauge rose to +11 in November, or the highest level since March 1995, after in October it showed -4. Expectations pointed an advance to +1 in November.
“A very encouraging report that confirms the view that activity in the U.K. has not decelerated,” Annalisa Piazza, an analyst at Newedge Group in London wrote in a note to clients, cited by Bloomberg. “A progressive improvement remains the key scenario in the coming months.”
In addition, according to another report by the Office for National Statistics (ONS), income from taxes in the United Kingdom increased, supported by economic recovery. Nations budget deficit, excluding temporary support for banks, narrowed to 8.1 billion GBP in October 2013 from 8.2 billion GBP in October 2012, while the total budget shortfall has decreased to 52.7 billion GBP since the beginning of this year. This data indicated that public sector in the country will probably reduce borrowing during the current fiscal year, as in March it was forecast that borrowing will reach 120 billion GBP.
The yield on UK benchmark 10-year gilts rose 10 basis points, or 0.1 percentage point, to reach 2.83% today, or the fastest pace since November 8th. The yield on UK 5-year gilts climbed seven basis points to reach 1.59%, after having risen to 1.60%, which was the highest level since November 13th. UK gilts have decreased 3.1% during this year through Wednesday.
Meanwhile, Bloomberg News reported that 80% percent of investors, participated in a survey by the media, predict that the Federal Reserve will probably delay its decision to begin reducing the scale of its asset purchases until March 2014 or later, while 5 percent of respondents suggest that tapering may occur in December.
Yesterday the minutes of Federal Reserve Bank’s policy meeting in October revealed that central bank’s policymakers “generally expected” employment data, coming out of the United States to improve, as this would “warrant trimming the pace of purchases in coming months.” Federal Open Market Committee (FOMC) members underscored that the Quantitative Easing is entirely dependent on economic data. A possible tapering of monetary stimulus may happen, when data pointed that US economy was picking up the pace.
Elsewhere, the pound was little changed against the euro, with EUR/GBP cross ticking up a mere 0.01% to trade at 0.8347 at 13:11 GMT. GBP/JPY pair, on the other hand, soared 1.01% on a daily basis to trade at 162.76 at 13:12 GMT.