The latest look at the UK manufacturing sector has delivered what appears to be a pretty upbeat assessment with the PMI reading for December surprising to the upside in rising to 54.2. This is the highest reading in 6 months and the second successive print to beat consensus forecasts. However, upon closer inspection the release is not as strong as it first appears with the higher print seemingly due to firms building stocks at a near-record pace due to concerns about a no-deal Brexit. Likewise, order books were clearly buoyed by customers taking preemptive measures and preparing for supply disruptions in the event of the UK leaving the EU without a deal.
The pound remains fairly well supported and above the $1.27 handle with the rate back around the same levels it traded at the start of last month before Brexit developments caused a push lower. The FTSE continues to struggle after ending 2018 with its worst annual return in a decade, with the benchmark having gotten off on the wrong foot at the start of the year with the market tumbling more than 100 points to trade lower by almost 2%.