Strong Growth in UK Manufacturing

The recovery by sterling is broad-based and the outlook will certainly improve following these gains.

Indeed, we believe many currency analysts are not accounting for the consistent positive surprises the UK economy continues to throw up.

How bearish can the Bank of England be in such an environment? We would suggest they will have to take another look at their plans. See Ishaq Siddiqi's views ahead of today's decisions further down the page.

Pound Sterling Live will bring updated technical forecasts as they are made available.

Global markets positive as Chinese PMI ticks higher

The US dollar is also in recovery mode today after comfort was taken over the Federal Reserve’s dovish attitude on US monetary policy.

"Together with a surprise uptick in Chinese PMIs have buoyed risk assets in Europe. With the Bank of England and European Central Bank likely to announce uneventful policy decisions [no change on current measures expected], investors have kicked off the month of August in a rather chirpy manner," says Ishaq Siddiqi at ETX Capital.

Siddiqi notes a A pleasant surprise from the Chinese PMI manufacturing front as the official index rose to 50.3 in July from 50.1 in June –[readings above 50 signal expansion whilst readings below 50 signal contraction].

BoE forecasted to stay on hold

Looking to today's central bank action, Siddiqi says:

"Turning to the BOE and ECB meetings later, both are expected to remain on hold with policies with interest rates at record lows of 0.5% for both central banks.

"For the BOE, growth in the UK with an uptick in most measures of economic activity build a greater excuse for Mark Carney and co to refrain from using QE as a tool to stimulate the economy. Rather, the BOE will hammer home the message that monetary policy will remain accommodative for an extended period via forward guidance.

"The ECB also embarked on forward guidance, settling the markets’ nerves somewhat. That said, chief Draghi did hint that further interest rate cuts are not out of the question."

We see the Pound Euro exchange rate maintaining a short-term positive bias.