This makes it only a recovery for the pairing rather than a significant advance.
Pound investors were pleased to see that Markit’s latest manufacturing Purchasing Managers’ Index (PMI) rebounded in May.
It climbed to 54.4 points and beat the previous period’s 53.9 points, as well as the expected lower printing of 53.5.
This was largely due to a slight acceleration in the rate of output growth, though this result was ultimately marred by a slowdown in new order inflows and weaker-than-expected sales.
Duncan Brock of the Chartered Institute of Procurement and Supply (CIPS) shared his thoughts on the results.
He said: “To the casual eye, the manufacturing sector appears to be in a robust mood with a further rise in activity and the highest output growth for five months.
“But pore over the detail, there are some darker developments taking place, impacting on new order and jobs growth and creating the lowest optimism for six months.”
In other news, investors are concerned that the UK will be subject to the US tariffs on steel and aluminium.
This is because the 25 per cent levy against EU metal exports could threaten the UK’s 31,000 jobs in the industry – potentially posing a substantial economic risk while the UK is still within the EU.
The pound inched ahead unperturbed by this news however, with analysts still hopeful that the Bank of England (BoE) will move to raise interest rates sometime this summer – data permitting.
The US dollar, on the other hand, has softened following the confirmation that tariffs against the import of metals are being imposed against the EU, Canada and Mexico.
The move has generated widespread international criticism, with members of President Donald Trump’s own Republican Party also questioning the protectionist move.
One of the most influential Republicans in the House of Representatives, House Speaker Paul Ryan said: “[These tariffs] target America’s allies when we should be working with them to address the unfair trading practices of countries like China.”
The danger is that in addition to the US’s ongoing trading spat with China, the new tariffs could mean that all affected nations impose punitive counter-tariffs on US exports.
Looking ahead, today’s raft of US labour market readings could provoke volatility, with a forecast rise in US payrolls threatening to overshadow UK manufacturing stats and cause a USD/GBP exchange rate rise.