By Sara Sjolin and Michael Kitchen, MarketWatch
LONDON (MarketWatch) — The British pound rose on Monday after upbeat manufacturing data confirmed the U.K. is seeing signs of recovery, while the dollar also moved broadly higher ahead of a rush of data and central-bank policy decisions due this week.
The pound GBPUSD +0.28% rose against most major currencies and exchanged hands at $1.5582, up from $1.5488 late Friday, and reached 1.1787 euros GBPEUR +0.34% , a 0.6% rise, according to FactSet. The currency was sent firmly higher after PMI data showed the U.K.’s manufacturing sector expanded at its fastest pace in two-and-a-half years in August, lifting expectations that an economic recovery is gathering pace in the third quarter.
The PMI reading for the euro zone also showed an improvement in August, helping lift the euro against the dollar. The euro EURUSD -0.06% was buying $1.3217, up fractionally from its $1.3215 level late Friday.
Meanwhile, the ICE dollar index DXY +0.16% — which tracks the U.S. currency against six rivals — rose to 82.118 from 82.074 late Friday in North America. That was off slightly from weekend highs above 82.2, struck on Sunday.
The WSJ Dollar Index XX:BUXX +0.16% also registered a mild gain, rising to 74.40 from 74.32.
The tight movement for the greenback came as U.S. markets were scheduled to remain closed Monday for the Labor Day holiday, but with key economic data and events due in the week ahead.
The European Central Bank, the Bank of England, the Bank of Japan and the Reserve Bank of Australia are all slated to issue monetary-policy decisions later in the week, though reports said none of the four were likely to make any interest-rate moves.
And on Friday, the U.S. is scheduled to post its August nonfarm-payrolls report and unemployment rate, seen as key for the U.S. Federal Reserve as it decides when to begin reducing the pace of its monthly bond-buying.
They said that the euro in particular could benefit “should incoming U.S. labor data fail to beat expectations,” and that given a likely stabilization of market-risk appetite, “we do not expect pairs such as [euro/yen] or [euro/dollar] to enter a new downtrend.”
Among other major units, the Australian dollar AUDUSD +0.58% advanced to 90.02 U.S. cents from 89.03 U.S. cents.
The Japanese yen moved lower, however, with the dollar USDJPY +0.86% appreciating to ÂĄ99.24 from ÂĄ98.16 late Friday.
Meanwhile, the Indian rupee USDINR +0.85% slipped but remained well above its record lows hit last week. In European trading, the dollar was buying 66.010 rupees, up from 65.705 rupees.
“As Rajan will assume the governorship of the RBI this coming Thursday, the bearish sentiment toward the [rupee] will be kept in check,” they wrote.
Data also showed India’s manufacturing sector output fell for the first time since March 2009 in August as new orders fell.
