Nick Nasad
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Yet Another Positive Macro Surprise from the UK - CBI Orders Turn Neutral

I have been following UK macro data more closely of late as I keep finding that the reports have surprised on the upside fairly consistently over the last 2 months. That has helped to foster a bullish GBP bias for me.

In a good sign for the manufacturing sector, the CBI Industrial Orders Expectations survey came in better than expected overnight, helping to further bolster this theme.

The CBI Orders index is a survey of 550 manufacturers about their expectations for order volume over the next 3 months. The number represents the percentage of manufacturers that believe orders will improve vs those that believe orders will fall (so a negative number means the split weighs more heavily on pessimists). While its not a sexy indicator, it is a timely and leading one. The survey period is for the current month - August - and its a question about the future expectations of a key sector.

Well, after a brutal period spanning the 4th quarter of 2012, and both the 1st and 2nd quarters of 2013, where the skew was heavily favoring those seeing a more pessimistic outlook, the trend has started to improve, and as exceptions called for a reading of -8, it came in at 0, meaning a nice 50/50 split. We have already seen the Manufacturing PMI pick up in the UK, so this is a sign that the order activity should continue to keep pace.

It's therefore not a big surprise to me that the GBP/USD has managed to set a 10month high, or that the EUR/GBP has moved in favor of the GPB of late. And, I will continue to work with this positive GBP bias over the next few weeks.

- Nick