Pound rises on UK manufacturing surge
The pound has hit a near five-year high against the dollar after a survey suggested that UK manufacturing grew faster than expected in April.
Sterling hit $1.6921, before falling back to $1.6906, and against the euro it rose 0.1% to 1.2184 euros.
The gains came after the Markit/CIPS Manufacturing Purchasing Managers' Index (PMI) ticked up to 57.3 from a revised 55.8 in March.
A figure above 50 indicates expansion, and economists had expected 55.4.
The PMI figure, the highest for five months, maintained the sector's "robust start to the year", CIPS said.
"Growth improved across the consumer, intermediate and investment goods sectors, as companies responded to rising new order inflows, new product launches and efforts to clear backlogs of work," it added.
Rob Dobson, senior economist at Markit, said the survey suggested that manufacturers were creating jobs at a pace of about 10,000 a month at present, with employment in the sector expanding for the 12th month in a row.
"The solid upswing in employment is providing the capacity to meet the needs of demand looking ahead," he said.
Manufacturing accounts for about a 10th of the UK's economy.
"Manufacturing's upturn is continuing apace with a rebound in productivity, solid job creation and above-average real wage gains across the sector highlighting the vital role being played by industry in the UK's continuing recovery," said Neil Prothero, deputy chief economist at EEF, the manufacturers' organisation.
"The domestic market remains the dominant driver of manufacturing activity, although there are some encouraging signs from a rise in export flows that the gradual revival in eurozone demand is beginning to feed through to manufacturers' order books."
Martin Beck, senior economic adviser to the EY Item Club, said: "It looks like manufacturing production has got off to a good start to Q2.
"Despite sterling climbing even higher over the last month, April's survey pointed to an increase in manufacturing export orders. And the strong pound may be providing some offsetting benefits, with average purchase prices paid by manufacturers falling for the second successive month, driven in part by lower import costs."