The pound strengthened against the euro yesterday, recovering from last week’s two-month low and was close to its highest point since mid-August.
The immediate cause was the currency markets refocusing attention on the potential for interest rate changes, as fuel and labour shortages disappear from the headlines. The Bank of England revealed last month that the the Monetary Policy Committee were unanimous in being willing to raise rates as early as this year if necessary to prevent inflation settling in.
The latest Purchasing Manager’s Index (PMI) figures released yesterday revealed that the manufacturing sector had experienced its weakest pace of expansion since February due to supply chain delays, slower new order growth and rising material and labour shortages. Construction PMI is due to be released today.
