The pound rose to a six-month high against the dollar extending the gains made last week. Better than expected PMI manufacturing figures allowed the pound to also hit a five-week high against the euro and one-month highs against a basket of currencies. The US dollar remained under pressure, suffering a three-month low against the euro.

Sterling

Growth in Britain’s manufacturing sector rose slightly in July as figures beat forecasts and remained indicative of buoyant growth in the sector. Manufacturing PMI fell to 57.3 in July from 57.6 but was still above the forecast of 57 and holding close to May’s 15-year high of 58.1. Last Friday’s preliminary Q2 GDP figures saw Britain’s economy grow at its fastest pace in four years between April and June. However, Bank of England Governor Mervyn King warned that the pace of growth may not be sustainable. Mr King’s concerns seem to have been completely ignored by markets as the pound soared to six-month highs against the US dollar and hit highs against a number of other currencies.

US dollar

The dollar came under continued pressure as data released in the States came in under expectations. This contrasted better than expected data in the UK and eurozone seeing the dollar fall to new lows against both currencies.

Euro

PMI manufacturing figures released in Europe were revised slightly higher than expected which helped sustain support for the euro. PMI for the eurozone was released at 56.7 which modestly beat market expectations of a 56.5 reading. This helped the euro push to three-month highs against the dollar. Like its British counterpart, the single currency has benefitted from a return of risk appetite.

Japanese yen

With no significant data released in Japan, the yen is very much reliant on market sentiments to help its cause. Australia left its interest rates on hold for another month which helped boost yen buying as Japanese investors repatriated Australian holdings.

Commercial Foreign Exchange Travelex Malta, freephone: 800 733 22, www.travelex.com/mt/