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UK Manufacturing Grows at Fastest Pace for 16 Years

Sterling gained value today as data showed UK manufacturing activity grew last month at its fastest pace in 16 years, extending earlier gains made on purchases by Asian sovereigns and talk of buying related to a dividend payout. The pound managed to rise over 2% against the Swiss Franc, an obscene lack of liquidity coupled with rumors that a supranational entity was buying sterling/Swiss franc , which supported the pound and hindered overall Swiss franc strength.

The CIPS manufacturing Purchasing Managers’ Index (PMI) rose to 58.3 in December, its highest since September 1994. The headline figure was above the consensus forecast of 57.0 and November’s downwardly revised reading of 57.5.

“The PMI numbers are a very positive surprise which shows that the manufacturing sector is still going great guns and not showing any visible signs of disruption by the snow over the month,” said Philip Shaw at Investec.

By Around midday yesterday the pound was up over 2 % against the Swiss franc and just over 1 % against the Euro, this is considered a good showing and could help to set a longer term trend for the pound. The only setback at the moment is the UK banking sector over exposure to dodgy European debt coupled with harsh public sector cuts and higher debt structure in the UK as a whole.

Sterling also got a lift earlier on buying from Asian sovereign accounts, macro funds and on talk of a UK clearer’s dividend payment which required it to buy pounds to pay investors, traders said.