Summary:

UK manufacturing PMI rises from 54.2 to 55.1 pts.

GBPUSD rises above 1.32 as investors brace for the Bank of England meeting

The UK economy seems to remain in a decent shape despite all the political uncertainty that has been related to legislative elections and incoming Brexit negotiations. While industry saw a setback in June, it quickly recovered in July, offering Bank of England another argument to consider an interest rate hike at the incoming meeting on Thursday.

UK industry showed a recovery after a minor, elections related slump in June. Source: Macrobond, XTB Research 

The manufacturing PMI increased from 54.2 (revised from originally reported 54.3 pts.) to 55.1 pts. providing a hope that election-related uncertainty had only a short lived impact on the markets. Obviously the Bank of England will consider many issues in their decision – inflation missed expectations last month and wages remain soft but since Mark Carney has already hinted that the MPC could consider interest rates hike (that would be simply a removal of the special cut introduced after the Brexit referendum last year), the business activity data could support such step.

GBPUSD remains in an upward trend and bulls could be eyeing 1.34 as the nearest resistance level. Source: xStation5 

Looking at the GBPUSD chart we can see that the upwards trend is alive and could be potentially continued as there is no vital resistance in sight. 1.34 was a barrier after an initial post-Brexit drop last year and this could be a resistance level again but this is still nearly 200 pips away.