(eToro Blog) Just a short while ago, Markit Economics reported that the PMI index for the United Kingdom’s manufacturing sector rose to 49.6 in December, an unexpected improvement from November’s upwardly revised 47.7 reading and which beat the consensus call of a decline to 47.3. While as with other indices, a reading of 50.0 separates contraction from expansion within the sector, but this improvement is certain to go some way to buoying investor sentiment. Positive sentiment, for the most part, has been sorely lacking, since many investors saw the U.K.’s recent veto of the proposed E.U. treaty as flat-out abandonment of a more than worthwhile cause.
The U.K. governments efforts toward reducing the country’s deficit and balancing the budget through the implementation of austerity measures, tax increases and budget cuts has been criticized by many analysts and investors as too constrictive to allow for any growth. Today’s data, however, may help to stem some of that criticism and provide the government with the ammunition to ensure adherence to their plans.
While the employment situation and welfare reform are key issues for the government, the Prime Minister, David Cameron, recently said that he would next address pay excesses in the heart of the London financial center. He noted that rewards for the upper echelon are not dependent on the risks involved or efforts undertaken and he aims to rectify that anomaly.
Today’s positive news gave a lift to the FTSE, which is higher by almost 1.20%; the German DAX is also higher by 1.3%, courtesy of improved German labor data while the French CAC-40 is down by .30. The Pound Sterling is higher against the U.S. Dollar, trading recently at 1.5599. On the eToro OpenBook platform, sentiment among traders of the GBP/USD pair is slightly more bearish; however eToro’s Sterling guru santosh remains bullish on the pair, recently opening several long positions.
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