UK Manufacturing Expands, Supporting Pound Sterling

The UK manufacturing sector continued to expand in August, according to the latest PMI figures. The S&P Global manufacturing PMI eased slightly to 51.7 from 51.9 in July, but still beat both the flash estimate and consensus.

Despite some encouraging signs, Pantheon Macroeconomics warned that energy prices remaining higher-for-longer will keep the PMI's price balances elevated, with risks of another increase as winter approaches.

The positive news for Sterling was largely driven by the improvement in hiring, which saw manufacturers become more willing to retain or add workers. The employment balance rose to 52.5 in August, from 50.1 in July, and the highest for two years.