Sterling above market level ahead of factory survey data

Sterling held above a key market level on Friday before factory survey data that will shed some light on how the economy is performing with less than two months to go before Britain is due to leave the European Union. The IHS Markit/CIPS Manufacturing Purchasing Managers' Index (PMI) is expected to show a modest decline to 53.5 in January from 54.2 in December, its highest reading in six months as British factories ramped up their stockpiling.

The pound was broadly steady at $1.3102 against the dollar and holding above a 200-day moving average of $1.3045. The British currency broke above that level last week on optimism that Britain would be able to avoid a no-deal Brexit. In January, it rose 3 per cent against the greenback, its biggest monthly rise since January 2018.

Against the euro, the pound was broadly steady at 87.36 pence. With the clock counting down to Brexit day on March 29, investors are trying to figure out whether May's Conservative Party rallying around her has increased the chances of her securing concessions from the EU or has pushed Britain toward further deadlock and uncertainty.

(With inputs from agencies.)