Sterling edges higher ahead of PMI data

The pound edged higher on Friday, setting the stage for a modest weekly gain, as investors adopted a wait-and-see attitude before a Dec. 12 general election. Markets are also waiting for the purchasing manager (PMI) data due shortly.

Voters face a stark choice at the upcoming election: a socialist vision pushed by opposition leader Jeremy Corbyn, including widespread nationalization and free public services, or Prime Minister Boris Johnson's drive to deliver Brexit within months and to build a "dynamic market economy". In the absence of any major market data this week, traders have been happy to keep the British currency in narrow ranges.

The pound has traded in a tight $1.2888-1.2985 band this week, its smallest weekly range since July 2014, according to Refinitiv data. "The choices are arguably poor from a market point of view," said Marie Owens-Thomsen, chief economist at wealth manager Indosuez, speaking of the choice between Johnson and Corbyn.

"With a large majority for Boris, we would probably increase the probability of leaving perhaps even without a deal; while a large majority for Corbyn would have the potential for lots of non-market friendly economic policies. So that's not a good solution either," she said. Against the dollar, the pound edged 0.1% up at $1.2915 while it was broadly steady against the euro at 85.72 pence.